How to save for retirement
It is safe to say that saving for retirement is one of the most important financial plans, each one of us. Therefore – how to save for retirement? You can opt for a pension or savings plan. Whatever option you choose, you'll be expected to increase in the fund and its value in the deposit term.
Retirement in the UK – how to save
Pension scheme – this probably the most popular form of saving for retirement. In this case, just remember that there are several different types of such programmes.
- State pension – whether you get a State Pension depends on the number of worked years, which are tax years. You can apply for it at retirement age, which is 65 years for both men and women. But I'm sure this will change, we are already talking about 68 years old,
- You can get company pension precisely from the company where you work, while the latter is created by employers (through various funds) in order to they will pay you it when you retire. If you join the program, you should consider the fact that most people are better off collecting pensions than not joining any program. In practice, it looks like that the employer pays example, 4% of your salary and you another 4%, and the government adds a tax exemption,
- Personal Retirement – is available from banks, insurance companies and building societies. You choose from when you start to draw your pension and the lowest threshold begins for 55 years and part of the whole pension can be spent on payment of the full amount of the exemption. Furthermore, retirement of shareholders and flexible type of personal pensions lets get started and finish adding the money whenever you want. The ideal solution, when we ask ourselves the question – how to save easily. To start saving yourself in this way you have to open SIPP account,
- Tax benefits for retirement – for many programs there are so-called tax benefits, eg. for every £ 78, which is ,,transported” to the basic rate of tax or personal pension, the government makes further £ 22. In turn, higher rate taxpayers can claim a higher amount of tax refund.
Savings and investment deduct the tax
How to save for retirement in other ways? A good possibility might be the tax deduction by savings and investments for retirement.
– Individual Savings Accounts is the account with which you do not get tax benefit on your contributions, and you also should not pay tax on interest. It is great here that most of the revenue from dividends or from „capital growth” is not taxed, of course, if you later sell an investment at a profit.
– National Savings and Investments (NS&I) – offers one of the most secure ways to save and invest money and the pension in the UK is supported by the government, which is why some programmes such as this, pay interest, which is taxable, while others are tax-free.
Many of the programmes is fully long-term investments. These may be appropriate to save until retirement.
See earlier blog post describing the pension in England.
Investment in money
If the bank keeps the money in your social contruction association, such funds should be increased – it is enough to stay ahead of inflation. If you want your pension in UK ,,gone up faster” consider further investment for them. It should be also taken into account that most investments carry risks – value funds can rise or fall. Why is it like that? Because investments include shares and bonds, joint investment and ownership.
Know what to invest in the stock market. If you purchase the appropriate actions at the right time then there is a good chance that you earned several hundred percent.
Tips for saving for retirement
You can also look around and compare savings plans personally, but it is good to get professional advice. Then we have less protection by taking part in the programme only on the basis of information than after obtaining professional advice.
- Choosing and using the services of a financial advisor is to offer useful information about savings, investments and pensions. Often, they give brochures about retirement planning.
- Consulting Retirement – The Pensions Advisory Service (TPAS) has in turn free advice on personal pensions and workplace.
Personal Pension is recommended for people:
- Unemployed, but that could afford to pay premiums,
- Employees whose employer does not offer a company social fund
- Employees who do not meet the conditions for company pension fund
- Income workers, who want to enlarge pension obtained from company pension fund.
People, who receive a retirement may be eligible for social assistance even from the state. Just that finished 60, and the weekly income does not exceed £ 151,20 you can receive the difference between income and the amount listed under the Guarantee Credit. If you have a wife and weekly income does not exceed £ 230.85, you will also got compensation. In turn, after completing 65 years old, you can apply for additional benefits of Savings Credit in the amount of £ 16.82 pounds for single people or £ 17.43 for a couple. However, in this case, you get the cash if you will fulfill certain conditions. Here it is worth noting that the Guarantee Credit together with the Savings Credit consist of the provision known as Pension Credit. These figures relate to the fiscal year 2015-2016 and, of course, refer to weekly benefits.
Learn more about pension credit from the government: www.gov.uk/pension-credit
A practical example of the use of Guarantee Credit:
Mark – single, 63
Mark is single and he is 63 years old and has his own house. He has only State Pension of £115.95. He has no other income, only a saving of £5000.
Then, Mark can get Guarantee Credit of £35.25 a week and thus he can raise his retirement to the amount of £151.20. His savings would not affect the amount of subsidies, as they are below £10,000.
Mark is qualified to Guarantee Credit only. Of course, Mark will get full Housing Benefit and other benefits like free dental care, because he gets the benefit of the Guarantee Credit.
Justin and Andrew – a couple, they both have 75 years old
Justin and Andrew are 75 years old and together have a pension of £ 252.57 per week.
- Basic State Pension (Justin) £115.95
- Basic State Pension (Andrew) £115.95
- Personal pension (Sarah) £61.12
- Oszczędności £13000
Because their income is higher than the £ 230.85, they are not eligible for Guarantee Credit but they are entitled to £ 11.15 with the Savings Credit.
Retirement in England terrify you? See useful links:
- State pension calculator
- The new State Pension
- Pension Credit
- Attendence allowance
- Special benefits
- Benefits Calculator
- over Benefits Calculator
- Pension in the UK – all you need to know
How to save for retirement in an even better way? People with low incomes are entitled to a Winter Fuel Payment – benefit paid usually in November is designed to help cover the cost of home heating. Clearly it depends on income and ranges from 100 to 300 pounds paid once. Benefits such as Cold Weather Payment, and the Warm Front Scheme can also help to maintain home. And after completing 60 years old you will get a 50 percent discount on bus tickets, in turn, after completing 75 years you will be exempt from paying the TV license.
Finally, I can advise that if you do not trust pension funds or would like to use their savings before you retire, you may want you began to accumulate money in the bank. I wrote earlier about banks, but in this case we forget about the current account because the interest rate is too low to give you a real income. So how to save for retirement? It is natural that if you chose to depositing money in the bank, you would like to get from them as much as possible. Saving opportunities are plenty, as previously mentioned, however, once you accumulate a substantial amount of money, eg. in the house, it is best to think about the next step. Open a cash account if you are not yet a financial tycoon might be interested in: Indywidual Savings Account and Saving Account. It is probably the best way for you to save and these accounts are strikingly similar to a regular savings account. That would be enough in this topic, I hope I was able to help you and prompt – how to save in order to gain.
What to do to have a decent retirement?
- Read moneygrabbing.co.uk – you will always find interesting information.
- Subscribe to a guide on how to save and make money in the UK.
- Open ISA account and keep there money.
- Invest in mutual funds or shares through SIPP accounts. I've just done this and you?
- Many companies require high monthly payments on SIPP accounts, for example, £ 80 per month. Do not give up and look for another company.
- Since for each paid £ 80 government pays £ 20 why you give up such an opportunity. I would recommend cheap SIPP account in Best Invest
- Do you have a supplementary pension at a change to one in which you will get. See tutorial where to look for work in the UK.
- If you have already collected pension, find out what you are entitled to benefits.
- You might have seen on television about the poor pensioners which barely make ends meet. Does such a view mobilize you to start postpone on retirement? If not in 40 years someone could watch another programme about you.
- Take an interest in finances. If you cannot save it just start to spend less through discounts, coupons, cashback websites, etc
- I hope that after reading the above tips you will act with your retirement. If you do this please write in the comments why.
NOTE: I present private opinions and I am not responsible for the readers' decisions. I always try to present current information but may no longer be up to date. Therefore, before making a decision, please verify them and consult a licensed financial adviser.
Hey! My name is Radek and I work hard in England everyday and the thought that I will be able to retire after 68 years is not in my favor. That is why I will prove that it is possible at the age of 55 or maybe earlier. See on this blog how I want to achieve this.