Reasons to start saving for a pension as early as possible

Thursday, 22 November 2012 12:28

Reasons to start saving for a pension as early as possible

Reasons to start saving for a pension as early as possible

When you begin your career, it is important to think about the future and start putting aside money for your retirement as soon as possible. This way, you can be confident you'll enjoy a comfortable life in your old age.

Here are a few of the top reasons to start preparing for your retirement now.

1)      Make the most of your salary

If you're young you perhaps can't imagine yourself in 40 years' time and don't feel like worrying about the financial problems you might encounter at that time. However, it is worthwhile to make the most of your disposable income while you can.

Indeed, the chances are you don't have many responsibilities when you begin your professional career, which means that most of the money you earn is spent on frivolous things. While you should enjoy this period of your life, it is wise to think of the future, as you will soon have to worry about being financially responsible for children and a mortgage. So, if you can afford to spare some cash every month – other than savings you're putting aside for a deposit on a house and other life expenses – it is a good idea to begin doing so as soon as possible.

2)      Possible career breaks in the future

Something else that young people don't necessarily think about is what might happen throughout their professional career. Chances are you will remain in employment for a few decades right until the time of your retirement, and therefore have plenty of years to put away some money for your pension – however, this doesn't always happen.

For instance, you could fall ill and subsequently become unable to work. If this happens, you will not be able to sign up to a company pension plan and it will be difficult setting up a private pension if you're not earning any money. Those who haven't put anything aside in their pension pot up until this point will find it difficult to enjoy a comfortable retirement if they are unable to save for their pension themselves.

You might also find your career plans change in the future, leaving you out of work for a significant period of time. For example, mothers might want to take a few years off to look after their children, during which time they may not be able to save for their pension. Alternatively, you could decide to retrain, and the time you would've spent earning money and paying into your retirement fund is now used up at university or college.

3)      To have enough money

The other reason to start saving as soon as you can as is to have enough money for your retirement finances. You may think that saving for 30-plus years will leave you with a substantial sum at the end for you to afford your lifestyle in your old age but, depending on your pension plan, you might not have accrued as much as you are expecting. Therefore, by beginning early, you can at least add to the final amount.

If you come to an age where you are considering stopping work, but are afraid that you haven't saved enough to live on for the next 20 or so years, you still have other options. For instance, you could release the equity in your property and live off some or all of the value of your home.



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