RETIREMENT SAVING ADVICE-WHY IS IT IMPORTANT ?

RETIREMENT SAVING ADVICE- WHY IS IT IMPORTANT?

RETIREMENT SAVING ADVICE- WHY IS IT IMPORTANT?
RETIREMENT SAVING ADVICE- WHY IS IT IMPORTANT?

 

Last month Pension Awareness Day was celebrated with the aim of raising awareness of the importance of saving for the future and to make people aware that they are not saving enough for the future. All this talk of pensions and savings got us thinking about why they are so important when considering retirement?Retirement saving Advice-Why is it Important ?

By law employers now have to provide workers with the option of a ‘Workplace Pension Scheme,’ this is called ‘automatic enrolment.’Retirement saving Advice-Why is it Important ?debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

So what is all the fuss about?

Here is our simple guide where we will be breaking down the ins and outs of pensions.Retirement saving Advice-Why is it Important ?

According to the Money Advice Service, more than half of the UK population are either not saving or not saving enough for retirement. The UK populations inadequate saving towards retirement is particularly concerning when considering that a state pension, though available for everyone, may not be enough to live on. To save earlier in life may be a wise option to then be able to top up later and keep you from struggling and one way to do this is by a pension.

But what is a state pension?

A state pension is funded by National Insurance Contributions which are paid during your working life and therefore the amount you receive will depend on how much you have contributed. You will be able to receive your state pension when you reach state pension age which is currently 55 but is subject to change.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

There are also additional benefits you can claim when you reach pension age known as Pension Credit. Pension Credit is a benefit which comes in two forms, Guarantee Credit which will top up your weekly income to £151.20 if you are single and to £230.85 if you are a couple. The other part of Pension Credit is Savings Credit which will be available for those who reach state pension age on or after 6th April 2016 it is an extra weekly payment of up to £14.82 if you are single and £17.43 if you are a couple for those who have saved money towards their retirement.Retirement saving Advice-Why is it Important ?

According to Age UK, 4 million people in the UK are eligible for Pension Credit, but only one in three of these are claiming so make sure you check your entitlement!debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

You can calculate when you will reach State Pension age or Pension Credit qualifying age and how much you will get by clicking here.Retirement saving Advice-Why is it Important ?

Current State Pension will be changing to a new system which will affect people reaching state pension age from 6th April 2016 onwards so make sure you stay up to date to see how this may change you.

So why take out a pension? What are the advantages?

By putting money into a pension, you will not only be saving money for the future, but your savings will grow.

Company/Workplace Pensions

If you are working, enrolling in a pension scheme will mean regular contributions based on a percentage of your salary are taken from your wages which will be invested, so they grow throughout your career and provide you with an income in retirement. Workplace Pensions may be looked at favorably as employees also have to pay contributions towards them as well as the government in the form of tax relief.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

You could describe a pension as a long-term savings plan with tax-relief as money put into a personal pension scheme qualifies for tax-relief therefore money that would have gone to the government as tax goes to your pension pot instead.Retirement saving Advice-Why is it Important ?debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

By October 2018 it will be compulsory for all eligible employees to be enrolled in a workplace pension. Defined contribution and defined benefit are the two main types of workplace pensions.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

A designated gift is the most common and involves the pension funds being put onto various investments such as stocks and shares. Defined benefit schemes pay an income when you retire based on how much you earn.

Personal Pension

In addition to Workplace Pensions, there are also Personal Pensions which are usually set up by individuals and can be defined as a ‘contribution pension scheme.’ With Personal Pensions there is the option of setting up regular monthly payments or giving a lump sum to a pension provider who will invest on your behalf. debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

Contributions to Personal Pensions attract tax relief and can still be taken out if you have a workplace pension.Retirement saving Advice-Why is it Important ?

Personal Pensions can work well for self-employed people as a way for them to save for their future.

Self-Invested Personal Pension

A Self-Invested Personal Pension or SIPP is similar to a Personal Pension, but the main difference is that with a SIPP the individual has more flexibility with the investments they can choose.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

With a SIPP as you can have greater flexibility in choosing and managing your finances there can be higher charges, and therefore this option is recommended for those with more significant funds who may have experience in investing.

Stakeholder Pension

Stakeholder pensions are similar to personal pensions and h.ave to meet government standards to ensure they are good value. A stakeholder pension is an individual contract between yourself and the pension provider.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

So the main benefits of a pension are.;

• They qualify for tax relief.

• If you are in employment, your employer will usually match or better your contributions

• When you reach qualifying pension age, you can take 25% of your pension savings as a tax-free lump sum

• The earliest you can access your pension savings is when you reach qualifying pension age, but you do not have to retire to do so.debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

So overall, pensions appear to be a great way to save for the future and ensure you are comfortable in retirement. If you are in employment, there are significant advantages as your employer will also contribute. For those who are self-employed, there are still issues regarding financial inclusion when it comes to pensions. Independent income often fluctuates making it challenging to commit to a particular monthly amount to be paid into a pension pot.

The Royal Society for the encouragement of Arts, Manufactures and Commerce’s recent report comes up with some suggestions regarding the self-employed including how pension providers could tailor schemes to suit the financial situations of the independent.Retirement saving Advice-Why is it Important ?debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

Pensions can ultimately help us all make sure we have an additional income in retirement to state pension so that we have enough to live off, however for schemes to become entirely inclusive for all, the financial circumstances of the self-employed will have to be considered and systems to be tailored to their needs.Retirement saving Advice-Why is it Important ?debt consolidation loan , debt consolidation , home equity loan , mortgage lenders of america reviews , investment property mortgage rates , mortgage application .

5 thoughts on “RETIREMENT SAVING ADVICE-WHY IS IT IMPORTANT ?”

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