Planning for the future can sometimes be daunting, with many people putting off thinking about their pensions and saving for retirement. However, with the retirement age increasing and recent talks by the government surrounding pension reviews, it’s more important than ever to start thinking about the future, so that you or your family don’t end up out of pocket once retired.
From recent pension reviews to the benefits of life insurance, here at Asda Money we’ve put together some top tips on saving for your future.
Changes to State Pensions
Most people in the UK will have built up a steady state pension over the years they’ve been working, so that by the time they retire they should have enough money to live comfortably. However, with the increases in retirement age, it’s now common for people to still be working when they’re well into their sixties.
The reasoning behind this is largely down to the UK’s ageing population, as people are living much longer than they used to due to advancements in healthcare and lifestyle changes. However, even though the average life expectancy is rising, some people aren’t actually fit enough to continue working in later life. Recent research has shown that as many as two in five retirees were forced to stop working before they reached retirement age due to factors such as ill health and redundancy.
The people who are forced to stop working before they can claim their state pension often won’t yet be at a point where they can afford to retire comfortably. With this in mind, the Government is currently working on The Cridland Review, which could potentially make it possible for people to claim their state pensions early.
Although an early payout would be a positive step for people who retire early, the amount they’d be able to withdraw would be lower due to the fact they would be claiming the money over a longer duration. Workers also need a minimum of 35 years of National Insurance contribution to be able to claim the full state pension, and those retiring early might not be able to reach this.
Start Saving Early
It’s important to start saving for retirement as early as possible, so you don’t have to rely on the state pension alone when you come to retire. If you’re still working, it’s a great idea to take full advantage of any company pension scheme which your employer offers. This way, your contribution is often topped up or even matched by the company, which you’ll receive alongside the Government state pension.
Although it can be tempting to only contribute the minimum amount, remember that the more you start adding into your pension early on, the more you’ll have saved up for your retirement.
Another option would be to take out a personal or private pension, which is a good option if you’re self-employed. This way, you’d pay in a set amount each month to your chosen pension provider, which you’ll then be able to draw out when you retire. Your provider should also claim tax relief at the basic rate, and add it to your pension pot.
There are many other ways to save money whilst you’re still working too. Investing money into a tax-free ISA is an effective way of doing it, where you can put aside a certain amount each month or year, and the money will gradually gain interest over time. Other popular ways to save money for the future include investing in stocks and shares, property, or valuables.
If you’re worried about being short of money when you retire from full time work, you could potentially look at getting a small part-time job to supplement your income. Jobs such as gardening or working in a shop often only require you to work a few hours per week, but would provide you with some extra money before you decide to retire completely.
When you’ve worked for most of your life and have steadily built up your savings, it’s important to make sure that this money is protected. Life insurance has many benefits, and will give you the peace of mind that your loved ones won’t be left struggling after you’re gone.
If you’re reaching retirement age and are considering getting a life insurance policy, then cover specifically for Over 50s will probably be the best option for you. There’s usually no need for a medical evaluation, and a cash sum will be paid out to those who are special to you when the inevitable happens.
If there’s a funeral benefit option that you can add on to your life insurance policy, this is often worth doing. It will usually add an additional £300 to the final payout to help with funeral costs, at no extra cost to you.
Remember, the money paid out from your life insurance policy will usually go to your estate, which could be subject to inheritance tax. Other key points to consider include how much exactly you wish to be paid out, and how much you are prepared to pay when it comes to your policy.
If you need help organising pensions and life insurance, it’s always best to contact a financial advisor to make sure you’re making the right choice to suit you. If you have any questions about Asda Money’s Over 50s Life Insurance, then call us on 0800 202 8104 and we’ll be happy to help.