The UK savings ratio is currently in the news – a record low of 1.7% of disposable income as against an average of almost 10% for the last 50 years. Warning bells are sounding! So how much are you actually saving for retirement? Is it enough?
Simply paying into your savings or into your pension for when you retire might not allow you to relax and enjoy your retirement as you had hoped if you’re not putting enough away. But what does “enough” look like? Here are a few questions to consider …
How old are you?
A simplistic but potentially helpful indicator as to whether your contributions are adequate for your needs later in life is to take the age you start paying into your pension, then divide it by two. This is just a guide as to the percentage of your pre-tax salary (remember – tax relief on contributions) you need to put away every year until you retire. The earlier you start paying in, the lower the percentage; delaying will just mean you need to pay in more later on.
How much is matched by your employer?
It’s worth keeping up to date not only with how much your employer is currently matching but also how this figure will increase if you up your contributions. That said, it’s a good idea not to rely too much on contribution matching, focusing instead on reaching your savings goals on your own.
So how do your savings habits shape up?
Is saving the first thing you do rather than putting away whatever you have left at the end of the month? When you receive a salary increase, do you take the opportunity to bump up your savings/pensions contributions so that the extra money doesn’t all go towards the here and now?
Above all, do you have a plan?
Having a documented Plan in place is critical. It enables you to check your goals and the means it incorporates to achieve those goals. You should review your Plan on a regular basis to ensure it continues to meet your targets.
Remember, we are here to help so please do not hesitate to contact us regarding your financial planning situation. Reviews are part of our added-value services for our clients.
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Barry Fleming & Partners are an independent financial advisor specialising in ISA’s, Pensions, Tax, Trusts, Estate Planning, Inheritance Tax Planning (IHT) and other Financial Planning areas. Please don’t hesitate to call on 01488 608 686 and ask to talk to one of our financial advisors. Alternatively use the contact form on our home page.