So with this little guide, I will fly through pretty much everything you need to know about pensions and saving for your retirement.
What is Retirement?
This is the perfect first question to start off with. There are essentially two types of retirements:
If you have made enough money to last a lifetime or enough investments to give you a good regular income you can pretty much stop working, this is called Early Retirement.
Normally, you will still have hobbies or things you like doing, but you don’t have to head to work every morning and be a slave to your paycheck. You’re GOOD!
State Retirement is where you have reached a set minimum retirement age & the Government starts paying you your state pension. Allowing you to stop working and rest your elderly bones!
What is a Pension?
A pension is pretty much a stack of money that you put to the side for your retirement, so you can live like a King or Queen when you are old!
You & your employer can pay into your pension stack. Some people call it a pension pot, but…not me. Stacks on stacks!
When you reach retirement you can take out money from your pension, you will be paid a regular income until you die. We call this an annuity, it’s basically a fixed regular payment.
Is Having a Pension Worth It?
No one likes to be old and broke, so getting a plan in place for your pension & retirement in general is a very good idea.
Pension plans usually give you some tax benefits that are worth having a little look into!
How Much Should I Put Into My Pension?
So if your workplace runs an auto-enrolment scheme where they automatically add you to the company pension, there is a set minimum amount you have to add to your pension each month.
This is called your “contribution”.
Your work will usually match the amount that you add into your pension each month so you can really start stacking!