When you’re in your forties, your retirement can still seem many years away, and may be low on your priority list.
But this is exactly the time you need to be focusing on your pension planning, because you still have around twenty years to grow your retirement pot.
Here’s how we advise our clients to plan for their retirement:
Make sure you pay-in monthly
By paying into your pension every month, the saving becomes automatic, and will come from your payslip or bank account without you even noticing.
Check your contributions are affordable
It’s important to make sure that your monthly contributions are affordable.
It’s easy to over-estimate how much you are willing (or can afford) to pay into your pension plan, and if you do over-commit then it’s much more likely that you’ll cancel your direct debit.
So, a manageable amount which you can maintain is a much better option.
Increase your contributions with Inflation
Almost all pension providers allow you to automatically increase your pension contribution each year, to keep pace with inflation.
This means that the amount you pay in will increase in line with the cost of living,
Understand how much you’ll need to retire
It’s really important to know what income you will need in retirement, and how big your pension needs to be in order to provide this income.
By understanding this information, your financial planner can calculate how much you need to pay into your plan to build up to this target value by your retirement date.
Make sure you’re investing wisely
Most modern pension providers offer a wide range of investments for your contributions.
It’s really important that the fund you invest in matches your attitude to risk and capacity for loss and gives you a reasonable prospect for long-term capital growth.
Start doing it now
As the proverb goes, the best time to plant a tree was twenty years ago – the second-best time is now.
The sooner you start with planning your retirement, the better off you’ll be, you have to start thinking about this today.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.