Pensions feel so remote for many of us. It’s just too early to start thinking about cruises, bowls and garden centres, right? Especially after we’ve lived through/ are living through something so monumentally huge as we’ve all shared over the least year or so.
It’s left us craving that living-for-the-moment feeling once again – you know the one: as soon as it’s safe, the temptation to spend all our money going for meals with loved ones, hopping on and off flights to our dream holiday destinations, going to festivals, drinking huge amounts. All those things we’ve missed and been robbed off. It’ll be catch up time super-sized, right?
We’re not trying to rain on anyone’s parade.
We get it. Truly.
We’ll be there, too.
But what this moment in time has taught us is uncertainty. That’s why at LGBT Money we have seen a spike in pension enquiries in the last few months. Because a pension is literally an insurance policy against hard times in old age. A vaccine jab to protect your financial well-being. After all, the state pension isn’t going to keep anyone in (insert your designer of choice!).
Here are six things to consider when you’re thinking pensions (and, yes, we can help you with them!).
1) DO start saving for your pension as early as possible. Because pensions are things used in later life, it’s not unusual to think we don’t need to deal with them until we get older. However, your pension works like a savings plan to which you and others contribute, so the earlier you start adding to that pension pot, the more money you’ll have tucked away for retirement.
2) DON’T opt out of your workplace pension. This is made easy for you by ‘automatic enrolment’. Automatic enrolment means that if you earn over £10,000 per annum and you’re over the age of 22, your employer must legally add you into the workplace pension scheme. Because the money your employer puts into your pension plan comes out of your wages, it’s easy to feel a little narked at the slightly diminished size of your full month’s pay packet and that it can be tempting to opt out; even more so if you’re feeling strapped for cash or want to save for something more immediately gratifying such as a holiday.
However, the money that your employer puts into your pension goes in before tax, which means you’d actually be getting more of your own earned money back in the long-run. An important consideration when organising your pension is taking advantage of all contributions available.
3) DO talk about pensions with friends and family. It might seem boring, but learning from others is important. The more you talk pensions, the more you’ll understand. One thing you will learn is the significant gender gap in pensions potentially equating to tens of thousands of pounds.
4) DO keep checking your pension plan and budgeting so you can top up your contributions when you can afford to do so. Many financial advisors will recommend that you increase your pension contributions with every bonus or pay rise – the thinking being that you won’t miss the top-up on income you didn’t have before.
5) DON’T forget to keep track of your previous pension plans. These days it’s very unlikely that you would have the same employer from your first job through to retirement so keep track of previous workplace pension plans. You can move all previous savings into one plan online to keep up-to-date.
6) DON’T forget to seek advice should you need it. After all, it’s all about safeguarding your future and those close to you. Because – as they say – you’re worth it!