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Retirement planning is simply about how you look at your future. However, more than a million Britons are facing a ‘mid-life savings crisis’ as they near the age of 40 with no retirement savings, according to research from Zurich.

A third of British adults aged 35 to 39 say they have no money saved into a pension, despite approaching the mid-point of their working lives.

Among ‘millennials’ (born between 1980 and 1999), the picture is equally bleak with almost two in five adults aged 25 to 34 not saving into a pension.

The findings highlight how financial pressures could be forcing some to start saving later, while others are struggling to save at all. Rising rents and house prices, combined with years of low wage growth, have made it harder than ever for people to save.

Wiping off tens of thousands of pounds

Delaying saving for a few years can wipe tens of thousands of pounds off the future value of your pot. The earlier you start investing into a pension, the more your savings will benefit from the compounded benefit of growth on growth.

It is important to maximise employer contributions and take advantage of pension tax relief. The good news is that your employer and the Government can help to boost your savings.

If you save into a workplace scheme, it is likely that your employer will pay into your pot – with many matching your contribution.

Under auto enrolment, all employers are obliged to pay into a workplace pension for their employees. If you decide to opt out of the scheme, you will miss out on employer contributions and tax relief, which is free money by any other name.

Regardless of whether or not you have started to save, these four tips can help get your pension on track:

1. Take advantage of tax relief

Any money you pay into your pension receives a rebate from the Government at the same rate as you pay Income Tax – 20%, 40% or 45%. This means it costs a basic rate taxpayer 80p to put £1 into their pension, a higher rate taxpayer 60p and a top rate taxpayer 55p.

2. Maximise employer contributions

Make the most of your workplace pension scheme. Some employers will match your pension contribution, which can turbo-charge your savings. For example, if you increase your current contribution by 3%, your employer may pay in an extra 3% too.

3. Taking risk can work to your benefit in the long term

It’s not too late. Even if you’re starting to save from 40, it’s likely you’ll have another 25 years before retirement.

To build up a healthy investment plan firstly consider your attitude to risk. Higher levels of return have a higher risk factor due to the more volatile sectors and regions that are targeted whereas the more cautious have a lower return.

4. Plan ahead

Know how much you need to invest each month to achieve your ideal retirement, and don’t forget to factor in inflation. Everyone’s different. And it’s likely the things you spend your money on now will change when you stop working.

Source data: Total sample size was 1,018 adults aged 18 to 39. Fieldwork was undertaken from 10–13 June 2016. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18 to 39).

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION MAY BE SUBJECT TO CHANGE, AND THEIR VALUE DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF THE INVESTOR.


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