Even if you have got years ahead of you, there is always time to think about your plans for the future, especially once you’re ready to leave the world of work for good and enjoy your golden years. Retirement is something that sensible people spends years upon years saving and planning for, but if you’re thinking of building up a nest egg of some kind for when you reach 65, how do you go about it, and what do you need to consider? Here are some handy tips:
- Set up a bank account, a pension fund or annuity to put your savings into on a weekly, monthly or even an annual basis. Building your pension fund or annuity up over time will help to give you a substantial amount of money to live on once retire from the active work force!
- Identify the right time to start saving. Ideally, you should start as soon as you can, because the longer you save for, the more money you’ll have for your retirement. Doing this will be helpful, as it will get you into the habit of saving regularly.
- Find a savings fund or annuity with a good rate. With help from people like my pension expert, you may very well find the best possible deal for an annuity plan that will give you a greater return on your pension investment upon retirement.
- Work out how much you want to save, or alternatively how much you can afford to set aside from now until your retirement. If, for example, you would like to save 500’000 by the time you are 65 at an expected annual rate of 6%, then you would have to save as much as £3230.77 per annum. Also, in this example, if you start your savings at 25 – then you have a 40 year period over which to save this amount annually. This may sound like a lot of money when looked at in its entirety; however the average annual life income looks seemingly different for men and women. If you are of the former sex, then annual amount you would have to live off would approximately £38’000, while for the latter group you would enjoy a life income of £29’000. This is a very ambitious goal, so your position may vary significantly, so it is important to set a realistic goal according to your individual circumstance.
- Take into account factors such as life expectancy and health. Women are expected to live for a few years more than men, which may mean having to save a little more in the case of females. As for health problems, it may be worth saving more in the event of any operations of healthcare needed post-retirement, as you will be more injury prone during the later years of your life.