When you are in your 20s and have just finished your training, the last thing on your mind will be retirement. That seems a lifetime away but it comes round quicker than you might realise and suddenly you stop working and have to live on whatever savings you have and a state pension. If you are one of the lucky ones, your job might have had a pension attached to it, but that is not always the case.
You could be in a company scheme where a contribution is taken from your salary each month, and for many young professionals that is quite normal and they do not give retirement another thought.
More Important Things In Life
When you are 20 something, providing for your retirement is a low priority. There are more important things in life such as getting on the property ladder or starting your family. It is a time when every penny counts and for this reason, often pensions get neglected. Any good financial advisor will tell you this is a mistake. It’s also a mistake that can be easily avoided.
The younger you start your pension the less you will need to contribute as time goes on and the better off you will be at the end of your career. From the very first deposit into a pension scheme, your pension pot starts to grow and by delaying getting started until your 30s can make a huge difference to the amount you need to invest for your future.
You may well have left college or university with debts and of course, it is vital to clear those. At the same time, you should try to save some money as well, and there is no better way to make your money grow than in a pension scheme. The only disadvantage is that it cannot be touched until you retire, so keep some savings in an easy access account as well.
Pay More In
Just look at what someone in your job would have been earning 40 years ago and compare it to what you are earning now. The cost of living has risen as well, but each time you get a pay rise you should pay more into your pension. A percentage of each rise you get will not be noticed now, but when you retire you will be so glad it is what you did.
Think About Your Future Lifestyle
Think about how you would like your retirement to be. Do you want to travel, buy a house by the sea or retire to another country? There are lots of options, but the one you will definitely want to avoid is the state pension being your only income. Then you will have no choices about what to do, as you will barely have enough money to survive.
With a pension scheme of your own, you can also retire at an earlier age if you want, and take a tax-free percentage of your pension pot as a lump sum. Just think what a better start that will be to the many years ahead of you where you do not have to go to work.