Pensions are an essential part of a successful financial plan. A pension is the money that you will live on when you stop working. In effect, it will replace the salary or wages that you earned before retirement.
Your pension is a special type of savings plan, with important tax breaks, that allows you to build up money to provide yourself with an income in retirement. It is a long-term arrangement with restricted access to the funds until you reach retirement age.
When you stop working, your salary/earning capacity will come to an end, but as you well know the ongoing costs of living will not! It is fair to say that each individual will still need a substantial regular income to maintain a decent standard of living. So, the question to be asked is ‘where will this income come from’? Unless you have other assets like property, rental income or a large amount of savings your pension (or pensions) will almost certainly be your main source of income after you have retired.
We all have ambitious plans to provide ourselves with a secure income in retirement. However, to make this a reality we need to put in place a financial plan. A pension remains the most tax efficient method of achieving this.
Retirement planning remains of the few ways in which an individual or company can make retirement provisions in a tax efficient manner. There are a myriad of rules and regulations governing pensions.
Getting impartial expert advice will help ensure that your retirement planning is structured to maximise the planning benefits available. Just look at the benefits of a pension – generous tax relief, often free employer contributions, tax free investment returns and the opportunity to take a large part of your pension fund back as tax free cash when you retire.
Most people underestimate how much they will need to save to provide an adequate income when they retire.
Pension advice tailored to your specific circumstances:
What do you want to do in retirement? What are your goals? What do you want to spend your money on?
How much do you need so you can do everything you want?
What assets and sources of income do you already have, including savings, property and your business?
What is the shortfall between what you have and what you need?
What are the most tax efficient ways of bridging that shortfall?
The earlier you start a pension, the easier it could be to build up your fund, which will allow you enjoy a comfortable retirement. The first step is to estimate what your monthly pension savings should be in order to help secure the future you want.