Start saving now to retire before 70
Written by Carl Turner on September 09, 2014.
Under the current coalition government in the UK, the number of over-65s in employment has increased by 36% to over one million according to figures recently published by Saga, a company specialising in services targeted at those over 50. The percentage of over 65s still working has jumped from 3.4% to 3.6% in the last year, largely due to the abolition of the compulsory retirement age.
This figure is set to rise and rise in the coming decades as the population ages and government reforms linking pension age to life expectancy are introduced. Of course the catalyst to these reforms is the government’s urgent need to make savings. It is estimated that raising the retirement age will save the government £500million over the next half century.
The new legislation means that young people entering the workforce today will have to work until the age of 70 before they can claim the state pension. The government maintains that they are basing retirement policy on the rule of thumb that people will spend a third of their adult life in retirement. For those wishing to continue in employment, this is good news, however for many it will mean carrying on working simply because they cannot afford to retire.
Aside from the fact that you will have to work longer before you receive it, relying on a state pension is a bad idea. [By the government’s own admission the state pension is not enough to live on}(http://www.independent.co.uk/news/uk/politics/state-pension-is-not-enough-to-live-on-minister-admits-2038076.html) and will at best afford you a retirement of “getting by”. The last decade has seen a huge shake up in the area of pensions with the responsibility shifting from employers to the individual. Many have avoided tackling the issue, in some cases due to a lack of understanding, in others because of apathy. The result is that vast numbers of people are saving insufficient funds to enjoy the retirement they desire.
If you don’t want to work until you reach 70, and if you really want to make the most of that third of your adult life when you are not working, you urgently need to take control of your own pension. There are two things that you can do to bolster your pension pot and hasten your retirement: firstly, save more of your income and secondly, ensure that your retirement savings are working as hard as they possibly can for you.
A pensions review with a professional will help you to clarify your aims as well as ascertain whether your current savings are performing sufficiently well to reach your goals. It may be in your interest to consolidate your pensions if you have more than one , or to transfer your pension if your investments are underperforming. Expert guidance can ensure that you are making the right decisions.