Planning for the future

Planning for the future can be difficult, especially when it is so far in the future and a life you can’t imagine. It’s easy to think that you have a huge amount of time to save for your retirement, but research has shown that nearly 40% of retirees wished they had started saving earlier.* The government has yet again raised the state pension age, so if you want to retire before 68 you will have to depend on either a work place or personal pension.

This blog post will give estimates on how much you should be saving dependent on your age, as well as tips for saving the most.

Research conducted by consumer watchdog Which? calculates the average person currently needs an annual income of £26,000 to fund a comfortable retirement.

Age Saving for State pension age Amount to save
20 48 years 68 years old £131
30 38 years 68 years old £198
40 27 years 67 years old £338
50 17 years 67 years old £633


In your 20s

If you’re in your 20s, now is the best time to start saving as you have the best chance to save as much as possible. Undoubtedly, saving for a house, a car or even going travelling may be at the top of your priorities list, but if you want to have a comfortable retirement now is the best time to start saving.

Below are some tips to help you towards your retirement savings:

  • Avoid opting out of your automatic enrolment if you are in employment.
  • Pay more into your workplace pension than the 1% minimum contribution. By 2019 employer contribution will rise to 3%, so by then both yourself and your employer combined could be paying 4% or more.
  • You could also consider a Lifetime ISA which allows you to pay £4,000 a year with the state paying a 25% annual bonus.

In your 30s

Priorities start to change when you hit 30, for example you may get married or start a family. Therefore, you may feel the squeeze of your finances even further, but it is still just as important to save for your retirement.

The older you get and the further your career progresses, your salary should follow suit. So now would be the time to increase your percentage contributions for your workplace pension.

In your 40s

If you’re lucky, when you get to 40 you may only have around 20-ish years left until retirement. Hopefully your earnings will have peaked while sizeable outgoings such as your mortgage will be under control. Because of these factors, now would be a good opportunity to assess the size of your pension pot and how it is invested. Your 40’s is a good time to take higher risk with your investments after building up a solid base and these should pay off in the long-run.

In your 50s

Thoughts of retiring should now be looming, now is the time when you should decide when to call it a day. Before making any decisions you should find out your state pension age, so you are aware when you can start claiming.

If your earnings allow, you should increase contributions to any pension pots or ISA’s you have. You can usually access any personal pensions from the age of 55, with options including annuities, income drawdown and taking either lump sums or the whole pot. The first 25% of your withdrawal will be tax-free, although the rest will be taxed as income.

In your 60s

With your retirement edging ever closer, your pension pots should be at their maximum. Getting updates on your state pension forecast from the government and all of your pension providers will tell you what you will receive and when. This will also give you time to contemplate what you want to do with the money, including any options to buy an annuity to provide you with a steady income for the rest of your life.

Make sure any outstanding debts are paid off as you won’t want to be carrying these into your post-work life. Pay off your mortgage and any credit cards debts if you haven’t already done so.

*Pentegra Retirement Services