Have you thought about how you’ll cope financially when the time to retire comes or do you think your twilight years are something to think about later in life?
Well, if you said the latter, then you’re a prime candidate to become one of the ‘Ostrich Generation’ – an increasing number of people who are facing pension poverty because they continue to bury their heads in the sand when it comes to arranging retirement finances.
HSBC questioned 1,000 British people of working age about retirement and 17% admitted to not knowing what their main source of retirement income will be, while an additional 21% said that they will be relying solely on the state pension.
Unsurprisingly people are concerned that they are unprepared for retirement, with over 60% worried about coping financially and almost 50% afraid that they are not saving enough for their retirement.
If you’re in your 20s or 30s, retirement might seem like a million years way, but the reality is pension poverty is growing and is set to become an even bigger problem in the future as the state pension won’t be worth as much as it is today.
Even if people would like to save money for their future, the reality is that many people are already struggling to make ends meet and saving just a little each month would prove difficult.
But with the rising cost of living, fuel poverty on the increase and people living longer than previous generations, it is important to create a pension action plan. Here are some useful tips that could help you establish your own action plan:
1) Get a state pension forecast; this will give you a clearer idea on what you can expect to receive from the government. You will be able to judge cost of living against this expected income and how much you will need to save / invest to ensure you can live comfortably.
2) Join a pension scheme at work. Your company could have a scheme in place that enables you to save towards your pension every month. Some businesses also make contributions towards employee pensions but this depends on the specific company.
3) Chase up outstanding pension schemes. Have you paid into a scheme in a previous job? If so, contact the company to find out what your pension options are.
4) Set up your own private scheme. Re-evaluate your current outgoings and assess if there are areas in your spending where you can cut back to accommodate for a pension fund
5) If you’re repaying debts and money is tight, work out when you will finish repaying what you owe and set a plan in place to start saving what you would normally spend on repaying debts.
Retirement might not seem like the most exciting thing to save for, but by forgoing the latest gadgets or must-have pair of shoes, you’ll be able to save for your future and spend precious time doing things you enjoy without worrying about pension poverty. And after a lifetime of hard work, isn’t that the very least you deserve?
Chris Turner writes for Baines & Ernst – a leading debt solutions provider in the UK. Debt consolidation could help you manage. For advice, contact Baines & Ernst.