When people start their working lives, a pension is the last thing on their mind. Seeming like a lifetime away, some people don’t start paying into their pension fund until they’re into their thirties or even later in their forties. There are no clear guidelines on when you should be starting a pensions and few people talk about it much so there’s little awareness about pensions and when they should be started. Here at Burton & Fisher we’re experienced and professional financial advisors so we can give you some advice on pensions to help you decide when to start contributing to yours.
Currently, less than 40% of workers aged between 22 and 29 contribute to a pension fund and financial experts put this down to confusion about pensions and increasing debt pressures. With UK students about to have higher student debts than ever and the economy seeming unreliable, paying into a pension fund doesn’t come very high on the list of priorities.
The downside to this is that these young people will face a longer retirement than the generations before them. Today’s workforce are expected to face a 50 year long working life and may not be able to touch their state pensions until they’re in their 70s. By 2055, the life expectancy of women will reach 100, with men catching up in 2080. Because of this, young people should be paying into their pension funds as soon as possible.
The general rule of thumb for when to start a pension is – if you’re financially stable, you should start saving for a pension as soon as possible. The sooner you start contributing to your pension, the less you’ll need to pay each year to have a comfortable retirement. If you leave it too late you could be paying upwards of 20% of your salary into your pot, which isn’t something most people would want to do.
With the pension schemes around these days, young people have the chance to take advantage of these and easily build up their pot. The workplace pension scheme, which employers have to automatically enrol their employees into if they are aged between 22 and state pension age, earn over £10,000 and work in the UK, means that employers have to pay into the employee’s pension pot when they do. There are plenty of other options for increasing your pension pot, including ISAs and the many pension investment options.
Here at Burton & Fisher we’re independent financial advisors in Lancaster so we provide pension advice every day. If you’d like some more information about what we can do for you don’t hesitate in contacting us on 01524 416872 and a member of our team will be happy to help.