‘Take control’ – Top tips for retirement planning in your 20’s and 30’s | Personal Finance | Finance
For people in their 20’s and 30’s planning for retirement is not something likely to be at the forefront of one’s mind. Reaching pension age may seem an eternity away and looking ahead to one’s post-working life might be something young people think they can put off until later. However, getting started in planning for retirement at a young age is hugely important and beneficial, in order to stand savers in good stead later on in life and avoid being caught out by leaving it late to plan one’s pension.
Get started early
“When it comes to long term investing, such as saving for your pension, there’s no better time to start than right now. The earlier you start contributing, the more you’ll be able to save gradually over the years, and the more you’ll be able to take advantage of compound interest. We know that it’s difficult for people to think far ahead, and that the word ‘retirement’ unsurprisingly doesn’t provoke any sense of urgency when it’s decades in the future.
“Try to think instead about your pension as the road to your future lifestyle. The earlier you start walking down that road, the better. Just remember that as with all investing, your capital is at risk, so it’s worth consulting a financial advisor if you’re not sure where to begin.”
“Checking your pension is seen as a complex process, but it should be as easy as checking your bank balance. Luckily, there are now all kinds of digital pension options that use technology to help you take control of your pension. Money management apps can help you automatically invest the appropriate amount for you in your pension, without you even having to think about it or let you bring all your pensions together, allowing you to easily monitor your progress.
“You can also consolidate all funds in the same place to give you ultimate control over your future and where your money is going, for example into ethical or sustainable funds. Just remember to do your research and bear in mind that past performance is not an indicator of the future.”
Contribute little and often
“Budgeting a certain amount each month can be difficult to balance with bills and other expenses, and young people often complain that they simply don’t have enough spare money to contribute towards a pension.
“We’ve found that some people are able to save more if they put away smaller amounts on a more regular basis. For example, saving a certain amount every time it rains or rounding up extra change on payments every week could help put aside that extra cash to get a pension rolling.”