Savings and Self Employment: How I'll Be Saving For Retirement

Despite reaching my third decade in life last year (and feeling old in many ways!) retirement of course is still such a long way off. Despite being an organised person and forever planning for the future, when it comes to pensions it's something I've consistently put off. Mainly, because it feels so distant, I can hardly even imagine it. However, I'm aware it's something I need to start thinking about- and how thinking ahead now is the key to a stress free life later on. As I'm self employed I don't have an employer paying into a pension for me each month, so it's up to me to get sorted. So I think it's time to start taking responsibility, with this in mind, I've researched the best ways to save for a pension.

Set Goals
As with anything, setting a goal and then splitting it up into smaller and more achievable goals is the way to go. Have a figure in mind, and work out what you'll need to save each year and then each month to reach it. Even if you don't always manage to save as much as you'd like, you at least have a number in mind that you can work towards. Industry estimates for a comfortable retirement commonly range between £23,000 and £27,000 a year. For reference, the age of retirement in the UK is currently sixty three, and the life expectancy is eighty. While both of these are likely to increase by the time I retire, it means potentially two decades (or more!) to cover. I have to admit, this thought really spurs me on to take action, it's a lot of money to raise so it's no wonder it takes people an entire working lifetime. It's worth mentioning that as a self employed person in the UK, you're entitled to a state pension just like anyone else. However, chances are that won't allow you to maintain the kind of lifestyle you've become accustomed to. Which is why saving is important!

Find a Pension Provider
You might be wondering why you need to find a pension provider and why you can't just save into a regular savings account. The reason for this comes down to the fact that very few savings accounts are able to keep pace with inflation and the cost of living. This results in the purchasing power of your cash is being eroded as time goes by. The big advantage of a pension is that you get tax relief on any contributions you make, so your investment is given an immediate boost. Most self employed people use a personal pension for their retirement savings, so search around and find the best retirement accounts for self employed people that you're happy to use. 

Start Early
It goes without saying that the earlier you start saving, the better off you'll be. With the above figures in mind, it makes good sense to start as early possible; put away what you can as it takes time to save enough money to get to where you need to be. As a self employed person your earnings can be irregular which can make saving a set amount tricky, but realistically, most of us can put at least a little money away each month and not even really feel it. If you're still in your twenties or even your late teens and are thinking that it's too early to start, know that it's really not.

Consider Getting A Financial Advisor
Managing money can be complex, get it wrong and you can end up in debt with no savings and make things difficult for yourself later down the line. We all work hard (and I'm a very strong believer in the philosophy of 'treat yo self') sometimes this can lead to money getting wasted. If you know you don't make the best decisions or are just confused about savings, investments, pensions and the best ways to put your money to use you could always look into financial planning companies. Getting the right advice can be invaluable and really help you to get on track both now and for the future. 

If Needed, Retire Later In Life
If you're willing to work a little longer, you could always retire later in life to ensure you have a steady income for a couple more years. The trouble with this is, none of us really know what we're going to be doing later down the line. Jobs aren't for life like they once were, and with technology moving at such a quick rate, companies come and go in the blink of an eye, customer demand changes and job roles change. So while this is an option, you can't bank on keeping the career you have now right through to retirement, or even what the job market will be like then.

Ask Your Employer About Their Pension Scheme
If you're an employee for a company rather than self employed, speak to your employer about the pension scheme they offer. While it may be obligatory that you sign up, some companies offer a scheme and don't advertise it as often as they should. If you think this is the case, it's best to speak to your HR Manager to find out how they can help you. Most of the time, employers will try to match the contribution you're making each and every month - almost doubling the amount you're saving. 

The number of self employed people in the UK is growing, but almost half of them (including myself!) don't have a private pension. Looks like it's time for us to do something about it.

Are you thinking of saving for your pension early? What changes can you make to your lifestyle to ensure you're as prepared as you can be?

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