Under starters orders – will you win the retirement race?
Thousands of people will take a punt on the world’s most famous steeplechase on April 6, pinning their hopes on their favourite making it first to the finish line.
Unless you’re the owner of the winning horse, who’ll collect a cool £500k in prize money, the Grand National is unlikely to provide you with enough to retire on, even if you do beat the bookies. For most of us, hard graft is the more likely route to long-term financial success.
If you are saving for future, there are some valuable lessons that can be learned from those racing on Saturday. Here’s what you need to know.
You need to get financially fit
If you want to be in with a chance of enjoying a comfortable retirement, then just like the trainers who’ve been busy putting Saturday’s runners through their paces, you’ll need to give your finances a thorough workout to make sure your money is working as hard as it possibly can.
Reducing outstanding debts and looking at ways you might be able to cut your outgoings might allow you to free up a bit of extra cash each month which you could use to top up your pension.
It’s also a good idea to review your retirement savings to make sure you’re not paying more than you need to in charges. The higher the fees, the more these will eat into your investment returns. Find out more about the impact charges can have on your pension in our blog Check your charges.
Don’t fall at the first
Thinking about how much you’ll need to save for retirement can be pretty scary, but don’t let this put you off planning for the future.
Remember that provided you’ve made enough National Insurance Contributions during your working lifetime, you’ll benefit from the full State Pension, which in the 2019/20 tax year is £168.60 a week.
You can use our pension calculator to help keep you on track. It’ll tell you how much you’ll need to save for either a modest or comfortable retirement, factoring in how much the State Pension will provide you with.
Prepare for some tough obstacles along the way
Some of the financial obstacles that face us when we’re saving for the future can seem just as daunting as Becher’s Brook, the most famous fence on the Aintree course.
Losing your income unexpectedly, having to take a career break to raise children, or being hit with a large expense that you hadn’t budgeted for are all things that can throw us off course and prevent us planning for retirement, but there are often things you can do to help ease the burden.
Our blog on retirement challenges explains some of the stumbling blocks people often come up against and looks at how to overcome them.
If you’re self-employed then you’ll face your own set of obstacles. Whilst auto-enrolment has made pensions easily accessible for millions of workers, those who are self-employed must make their own provision, and won’t have the benefit of employer contributions. The good news is that there are plenty of pension options available. Learn which might be right for you in our blog Pensions for the self-employed.
A slow and steady approach often works better than a last-minute sprint
When it comes to saving for retirement, a slow and steady approach often reaps the biggest rewards.
The sooner you can start saving for your future the better, even if you can only afford to squirrel a little bit away each month.
That’s because your savings will have longer to benefit from compound interest, which is the ability for income to generate more income and gains to grow on gains. If, however, you simply put a lump sum into your pension a few years before you stop work, your savings won’t have much time to grow before you’ll need them.
Learn more about what sort of approach to planning for retirement you might want to take in your twenties, thirties and forties in our blog on Pension planning for every life stage, part one and what you may want to think about if you’re in your fifties or sixties in part two.