You’re picturing it now. Your dream retirement. A life of freedom, fulfillment, and fun with your loved ones. After all, it’s what you deserve after a lifetime of hard work. But, in comes the internet, filling your head with information that’s often unclear or even misleading. We know there are many online retirement myths making the rounds right now that can potentially throw you off track, so we are shedding some light on the top three here:
1. You’ve missed the chance to save for retirement.
It’s a phrase we hear frequently: “I’ve left it too late to start saving for retirement.” Pension and retirement planning can seem daunting, leading some to overspend, thinking it is too late to save. But here’s the thing: It’s never too late to turn things around. According to Yahoo Finance, a 40-year-old earning £35,000, putting away 8% into their pension yearly, could have around £107,000 by state pension age. This shows that even if you feel you are starting late, there are steps you can take towards securing a better retirement.
2. You don’t have enough for the retirement that you want.
How many times have you searched ‘How much do I need to retire?’ or even thought about searching it? Probably lots. And you probably still don’t know the answer. That is because everyone’s circumstance is different. There are hundreds of different statistics and figures online showing the specific amount that people ‘need’ to retire, but whatever number this throws out, it’s unlikely to be your number. There are lot of things to consider when factoring in what your ‘enough’ is.
When it comes to funding your pension though, remember that your monthly contribution isn’t the only cash flowing in. For every £80 you put in (if you are a basic tax rate payer), the government chips in to make it £100—this is known as tax relief.
And if you’re part of a workplace pension scheme, both your contributions and your employers can significantly boost your pension savings. Coupled with long-term investments, this often means a much healthier pension pot than you might have imagined.
3. You automatically contribute every month to your workplace pension, so you’re covered.”
The current setup for auto-enrolment asks for 8% contributions, with 5% coming from you and 3% from your employer. While this is a solid starting point and better than not saving into a pension at all, to ensure a reasonable retirement income, saving a bit more is usually a good idea. Here’s a tip – whenever you get a pay rise or change jobs, you may want to think about revisiting how much you’re putting into your pension. Sometimes, if you increase your contributions, your employer may increase theirs too, so it’s definitely worth checking.
These myths are just the tip of the iceberg and there are many more out there. So, if you want to ensure that you are retirement-ready, it’s always best to speak to professionals like us. We can help you find your true path to a happy retirement and answer all your questions. It’s about making smart moves today for the retirement you imagine tomorrow.
If you’re ready for a one-to-one chat to find out what’s enough for your retirement and if 2024 could be the year you retire, tap here.
Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People
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