Is Saving Into a Workplace Pension Enough?
It is important to know your pension options, especially as a workplace pension might not necessarily afford your desired retirement.
Although workplace pensions are a great way to grow your long-term finances, they may not help you to purely fund your retirement plans.
Relying solely on a workplace pension, contributing at the minimum level each month could leave you short of a ‘comfortable’ retirement amount. In addition, the pension fund that you invest into might not align with your retirement plans.
There can be a lot of confusion around savings and pensions, in particular knowing if you’re saving enough to fund your retirement goals.
A financial planner can help you plan your best long-term savings for your individual needs and circumstances. Here are some main factors to consider:
What is your target retirement income?
We all enjoy different types of lifestyles and it’s important to determine the right amount of income you’ll require to enjoy a comfortable retirement.
Calculating an estimate of the funds you need can help you to work out how much you need to save and if you’re on track to make these saving goals in time for when you come to retire.
As a quick estimate, we recommend the ‘50-70’ rule, aiming for an annual retirement income that is between 50 and 70% of your current income. For example, if you earn £85,000, a comfortable pension income will be between £42,500 and £60,000 per annum.
For a detailed sum, check out our 10 Years to Retirement Checklist.
It is never too late or too early to start planning
There are always options depending on what stage you are at with your pension planning. Saving early into your workplace pension is a great way to start saving, especially as your employer also pays into your pension pot too. As well as benefiting from the government in the form of tax relief.
You can also take advantage of your annual pension allowance, these are limited to your circumstances, however, provide tax relief. Typically, you can’t pay more into your pension each year than you earn in salary (with a max of £40,000 per annum). High earners beware, however, as your annual allowance can be tapered down as low as £4,000.
Don’t forget to factor in the cost of living when planning your retirement. With the rate of inflation, typically the cost of living can double every 25 years or so!
What are your other options?
Not all workplace pensions are the same, it’s important to understand what type of scheme you have and how much is contributed by you and your employer each month. It may be the case that you could also benefit from other saving options.
Such as a self-invested personal pension scheme, ISAs, tax allowances and investments. A financial planner can help review your financial situation and find the right products for your needs and circumstances.
In addition, with pension rules always changing and not being widely understood, it’s no surprise that many individuals end up with surprise tax bills. If you’re thinking of topping up your pension, we can help navigate these rules.
Pension Advice with Schofield
Take back control of your money and savings, with a pension financial plan. Taking control today could have a big impact on your future long-term finances and retirement goals.
Get in touch with our expert financial planners at Schofield to check that your retirement and pension plans are up to date. Our cash flow planning tool will clearly show you whether you are on target to live the retirement you want.
Call us now on 01423 368000 or email us at firstname.lastname@example.org
The value of an investment with Schofield Money Ltd is directly tied to funds selected, as a result, the value can fall as well as rise, you may get back less than originally invested.
This article is for information purposes only. It does not constitute any financial or investment advice. Please contact us if you wish to proceed with any course of action suggested in this article.