UK Pension Calculator

Pension transfers, news, tips, plans, finance, QROPS...

Sun 24 Sep 2017 15:01 GMT
UK Pension Calculator

UK Pensions the Easy Way

Helping You to find the best UK pension plan

When should you start saving for your pension?

When should you start saving for your pension?
Published:  22 Feb at 6 PM
This is a question that will probably never get a proper answer, or at least will never get an answer that will actually make a difference. Realistically, the earlier you start the better and more so than you think. Some people may be of the opinion that they don’t need to waste their hard-earned savings on putting it to one side for later life when they will be given a pension by the government anyway.But with the government funded pension being around £100 a week without means testing, if you leave it until you reach retirement you will be looking at quite a struggle to get by, especially if you are still paying a mortgage or any other loans.

It is also important to remember that should you wish to put money aside in a pension plan, their are big tax advantages to doing so - often a rarity in the UK these days, not to mention the benefits of compound interest. For example, if you had just turned 65 and had been putting £50 a month away since you were just 20, saving it up in cash you’d have about £27,000 in savings. However, had you decided to put your £50 a month into a pension which would average a return of around 7% (based on the fact that the stock markets have grown around 8% per annum for the previous eighty years), you would now have £190,000 in savings. Obviously this wouldn’t include all the fees you would be required to pay over the course of the investment but you can see the potential benefit of compound interest!

Most young people don’t think about their pensions and understandably so. It’s a difficult task to try and make yourself put aside your hard earned cash for something that will happen in 40 years. But the sooner you start saving, the more you will end up having - even if it’s only £50 a month. Every month you miss can make a significant difference. One monthly installment of £50 would lose you £157.50 worth of interest over the course of the 40 years so the earlier you start, the more you will earn.

A lot of people in the fifties and sixties are concerned at their retirement prospects. Either they haven't bothered saving or their savings don't look as if they'll suffice - particularly with the very low annuity rates on offer currently. For the first category there's some good news in that the Government offers a Minimum Income Guarantee. This operates on a means tested basis which means you have to list all your savings and other income. The last time we looked this Guarantee Credit was £130 a week for a single person and £198 for a couple - there are top-ups for those with disabilities. For those who've tried to save but whose pension funds - or other retirement plans - haven't done as well as hoped for, the comfort is that at least they'll get this too. (We'll ignore the fact it's not that fair in that they presumably made some sacrifices to save while the others weren't bothering and can qualify for means-tested help).

« Compare Pension Providers - What To Look For

Pension Sharing on Divorce »