Retirement income is something that many of us worry about but delay doing anything about. It can be confusing, complicated and expensive and so it is no wonder we avoid it. However, below are some suggestions for things that you can consider to help you.
A company pension can be one of the best ways to save for retirement. Most employers will contribute as well as you and this means that you can build up quite a significant pension pot as a result. The investments that you make are not taxed either and this can help the value of it to be significantly higher. The drawback of these come if you die before you retire or early in retirement as you will not get a lot back. You may be allowed to name your spouse or children to be able to benefit from it but they will only be able to have a percentage of it, not the full amount that you would have been entitled to. It is well worth calculating how much you put in each year and then look at the forecast as to how much you will get out. Work out how long you will have to live after retirement to get back more than you have paid in. This will allow you to decide whether you think that it is worth it.
Most governments have a pension scheme. You may have to pay into it when you work and then you will be able to claim payments when you retire. Again these can be pretty worthwhile, but it is worth checking your pension forecast to see what you will get back. Although most workers have no choice, you may be able to stop paying in or pay extra in and so it is worth considering whether either of these might be something that you should do. A government pension tends to be a small amount of money but it all adds to your retirement income and you may be entitled to a percentages of your partners should they die before you.
Stocks and Shares
The main disadvantage of pensions is that if you die young then family members may not get any money. You may even lose everything that you paid in. Therefore some people will consider alternative investments that they can use to generate an income from when they retire and then if they die young, others will inherit everything. It can be difficult to find funds which perform well and it is best to research really hard before choosing one. You may want to ask a financial advisor for help and also see whether there are any tax free or low tax options that you can use which will help to increase the investment.
Premium bonds are a UK bond which are favoured a lot as a retirement income. They are tax free which is part of the appeal and a sort of lottery. Bonds are bought and then each month bond numbers are drawn and allocated different value prizes from £25 to £1million. The attraction of this is the tax free prizes but the chances of winning are pretty low. Obviously the more bonds you hold, the better the chance that you will win and there is a limit on how many bonds you can buy. They are government bonds which means that they are secure, which is also a reason why they are favoured by many.
Savings accounts are a safe way to keep money. The interest paid on them will be very low, particularly while interest rates are low. However, there is no risk of losing the capital in the way that there is with investments. These would be recommended more if you think that you will need the money in the short term or if you are very concerned about risk.