We all hope the day when we can leave the job – but to ensure your retirement is comfortable you will need to prepare for it carefully.
Put a proportion of their income for retirement can seem an obstacle at the moment, but really need to save for as long as possible to earn a decent income in later years. Not only this, but there are substantial benefits for saving in a pension – not taxed on contributions and may have additional extras such as life insurance or lump sums included in their plan.
These days people are investing more and more on private pension savings in the long term – the state pension is likely to be insignificant with an aging population.
State Pension
Currently, the pension basic for a single person is £ 82.05 a week. This depends on you having made sufficient National Insurance Contributions over their working life. Even if you have paid your mortgage when you retire, would this be enough for you to live? Note that the age at which you can claim your pension (65 for men, 60 for women) is likely to grow in the near future and still climbing.
Company Pensions
Employers may offer some form pension scheme. The terms and details of these vary from company to company, but generally fall into one of two basic types: "the final salary schemes based on salary and how long you have been paying into the pension and money purchase "plans, which depend on the amount contributed to the fund. When you retire, then buy an annuity – a type of insurance that will pay you a regular income. A money purchase scheme may be more flexible, but a little riskier.
Personal pensions
These systems offer great flexibility, and there are several ways to invest, including investment companies and unit systems depend on stock prices. Personal pensions operate in roughly the same way that company pension, just more control over their investment. At present there are limits to the contributions it can make to personal pensions, but these are to change in 2006.
The pension rules are changing all the time, and are likely to undergo radical changes in the coming years. For up to date advice, check the Pensions Advisory Service in www.pensionsadvisoryservice.org.uk
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