As a thirty something (and hurtling towards the big 40) I often find myself thinking about retirement and what it’s going to look like.  Not necessarily what I’ll be doing or the fact I’ll be finished work forever (yippee), I’m thinking about money, my pension, and will I have enough to enjoy my life the way I do now.

I work in the financial services industry therefore I have the upper hand over many of my peers in my understanding of pensions, tax relief and what these can provide.

There is also the possibility that there may not be a state pension… yes… there may not be a state pension by the time I reach state pension age, which is aged 68 for me (!).

  1. The state pension is not a guarantee and 2. Could you live on £164 per week the current state pension amount? I know I couldn’t!

Thank goodness the Government brought in Auto Enrolment in 2012, which means that all employers must now enrol their workers into a workplace pension and make an employer contribution to the scheme, with you also making a personal contribution.

Although it is still possible to opt out of a workplace pension scheme (only after you have been enrolled), it is really encouraging for us, as financial planners, to see the low opt out rates from the pension schemes we have set up on behalf of employers, by younger members.

This means the younger generation are starting to save for their future!

Now it’s just the slightly older generation we need to concentrate on, those that chose not to join their employer scheme when they first started working, because they wanted to spend their salary on ‘stuff’ and thought they were too young to think about the future.

I know there will be many people in this age bracket (let’s say aged between 30 and 45) who may only have just recently been auto enrolled into a pension, having never made a pension contribution before. It is this generation who will have a huge shortfall in their pension fund and potentially an income in retirement that will be insufficient to live on.  Terrifying!

Fellow millennials, please don’t panic but do take action:

  • Focus on having a plan – this might not include pensions but there are some tax efficiencies that you should look into.
  • Think hard before opting out of your employer pension scheme and look at whether it’s affordable to save a bit more.
  • Think about what you will need and what sort of “pot” you might need to provide that level of income.
  • Look at the Government’s Money Advice Service – it’s good but, if you don’t think you can do this on your own and need to be accountable seek trusted independent financial advice.

Parents, grandparents please pass this to your twenty-something and thirty-something children and grandchildren. Ask them what provision they have in the way of pensions and what they are contributing to their employer pension schemes. You could even help your child/grandchild by making contributions on their behalf. Again, seek financial advice.

Don’t leave it until later. Later will be too late.

You hear horror stories of old age pensioners unable to pay for heating or tv licences… if that scares you, then think about it now.

Always plan for your future.

 

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