Posted on: 18th December 2018
Last year, research suggested that almost half of UK citizens bury their heads in the sand when it comes to their. 51 per cent save nothing into a and just under half don’t understand what they need for .
These statistics show that not enough people in the UK are saving enough for retirement. So, what happens if you reach your 40s and have no savings? Is working for the rest of your life the only option? Many believe that all hope is lost if their savings pot is empty. However, you can still build a decent pension at this age. We have some tips that will help you get on the right track to a financially better retirement.
Piece together your pensions
Tracking down those old workplace pensions is the best place to start. We have another guide on how to trace lost pensions, so we shall keep this one brief. It is likely that you have worked in a few placed by now, meaning you will probably have a few old pensions here and there. You may be surprised by what you find. There is an estimated £400 million in unclaimed pensions. A little bit of digging can do wonders for the position of your pension.
If you have pensions all over the place, it would make sense for you to consolidate them into one pension. By doing so, you will find it easier to manage your savings. What’s more, there is a chance that combining your dormant pensions could save you money. Over time, high fees can have a huge impact, especially if fund growth is poor and you don’t contribute on a regular basis. It makes sense for you to bring these pots together into a better-value plan. However, be aware that this option may not work for everyone, especially if you have a pension with guaranteed benefits.
Come up with a contribution plan
As soon as your current situation becomes clear, you will be in a much better position to put together a plan to save. There is no magic number designed to provide you with the perfect retirement. It really just comes down to your individual circumstances. However, there is some helpful research that can give you a good idea.
Recently, Which? surveyed 2,000 pensioners to find that, on average, retired couples needed £18,000 a year to cover household essentials. This includes food, utilities, transport and housing costs. This number rose to £26,000 when considering extras, such as European holiday and leisure activities. This is £13,000 per person per year. So, if you are entitled to the full state pension of £8,546.20, the survey suggests that you only need to supplement it with around £5,000 per year.
Based on the current ages of retirement and entitlement to the State, this means couples who are starting from scratch must save the following:
- £131 a month from 20
- £198 a month from 30
- £338 a month from 40
- £633 a month from 50
So, for couples who begin saving their pension from the age of 40, they will need to individually save £169 a month. It could be even less than this if you have small pots from previous jobs. If you leave it until your 50’s, the costs can really begin to add up.
In short, saving sooner rather than later will pay off. Elsewhere, be sure to check that you have enrolled in your workplace pension scheme if you work for a company and are not self-employed. An employer’s matched contributions can really begin to add up. If you are self-employed, there are many things you can do to help yourself save.are here to guide you through your plans for saving, making it easy to understand.
Keep your contributions up
We understand that life can be rather costly, and it can be tempting to cut back on your pension to afford a better life now. However, the truth is that if you are just starting to save in your 40s, then you will have to be strict with your finances and saving. There is still plenty of time for you to build a decent pension. You may not even have to change your lifestyle that much. After all, sometimes the small changes can make a big difference to your pension savings. There are dozens of ways in which you can cut costs to save more.
Talk to Haven IFA
One thing we really do recommend is turning to an independent financial adviser to ensure your savings are going in the right place. Haven IFA are here to assist with all areas of pensions and savings advice so that you can be prepared for a comfortable retirement. To learn more about how we can help, get in touch.