Pensions. Even the mention of the word sends some people drowsy.
But if you think you’ve a good few years to think about putting cash into a pension you may end up missing out later in life.
At Co-Navigate we like to hear about your life plans first and then we can advise you on the best way to get you there.
Whatever advice we may give you, don’t write off a pension before you start planning.
Here, we look at the common reasons that people give for not having a pension.
I want to enjoy my money now
The life expectancy age keeps rising, so you need to consider how you’ll fund your lifestyle when you get older.
It is tempting to say you might be hit by a bus tomorrow, but if that happened you wouldn’t be able to enjoy what’s in your bank either!
But what if you don’t get hit by that bus? A state pension that is diminishing is a good reason for having a private pension in place.
Also, if something were to happen to you, you can pass on the money in a pension to your beneficiaries.
It’s usually treated more kindly by the taxman too, so you know your money can stay with your loved ones.
I’m too young
As soon as you’re working you need to consider a pension. Depending on your age and earnings, you should be automatically opted in to a workplace pension which forces your employer to pay in on your behalf.
But if you are looking far ahead to the future, financial planning is essential and a pension could be part of the answer.
The sooner you start a pension plan the more money you are likely to get back,. Because of the compounded growth someone starting at age 20 could have almost twice the pension than someone starting at 30.
It could also mean you might be able to retire early. If that’s one of your goals then then you might need a financial plan.
I’m too old
Pensions changed massively in 2015. You no longer need to purchase an annuity, and can instead take pension income flexibly. So while you are earning why wouldn’t you benefit from the tax-relief benefits to build your pension fund? The longer you leave it the less you will have!
Pensions are boring
It’s a word that fails to excite. Maybe there needs to be a new word for it!
The truth is your ‘pension’ is money that is being put aside with the aim of offering you a better lifestyle as you get older.
It could also mean you can finish working at an earlier age to pursue your dreams – and that’s not boring!
I don’t want to tie my money up
It is understandable that you don’t want cash locked away so you can’t get to it for a rainy day. But again, that’s the beauty of financial planning and why we do this before we recommend any products.
We’d never suggest you put all your eggs in one basket. We listen to your life goals and can advise a number of ways to reach them and get the most out of your money.
The advantage of pensions is you and your employer can contribute, with both of you able to claim generous tax relief.
So having some money in a pension could be a wise way for you to reach your financial goals.
A pension is probably even more important, as you don’t have the advantage of your employer paying in to one for you.
While you won’t benefit from employer contributions you still get tax relief when saving into a pension scheme.
If you own a limited company you could choose to make employer contributions and help reduce your corporation tax bill.
I move jobs regularly
You may think that by moving jobs often means that you won’t save enough to make it worthwhile. You may also be concerned that fees could eat into your pension pot.
One way of overcoming this is to consolidate your pensions into a single plan.
If you have saved into different pensions, we will be able to look at what you have and give the best advice depending on individual cases.
Pensions really don’t have to be boring and as part of a financial plan it can be interesting to check if you’re on track to reach your retirement goals. Our advice is to keep an open mind until we have chance to listen to you.
For a no-obligation chat to see how we can help you, contact us today. We’re based in Newcastle but give pensions and financial planning advice across the North East.