News that the government is planning to scrap the retirement age of 65, raise it to 66 for men by 2016 and perhaps extend it to 70 in the future should set alarm bells ringing.
If you are in your 20s, 30s or 40s then retirement probably seems a long way off and not really worth thinking about. Actually, it is going to get a much longer way off if you don’t get your state pension until 70. And there will be big changes for public sector workers who expect to draw their pension.
Start doing something about it now. There is absolutely no alternative to sorting yourself out with a retirement fund today (and I mean TODAY) if you want to retire at 55 or 60 and enjoy your rest from work while still being in a suitable physical shape to do so.
There are three simple choices:
1. join your employer’s scheme and pay extra into it
2. set up your own saving scheme (either into a personal pension or individual savings account)
3. start paying into a regular savings account with a bank or building society.
All three have pros and cons. Your employer’s scheme might downgrade your pension benefits in the future – but at least you don’t pay any costs of administration.
A private scheme offers great flexibility, but you will have to bear the admin costs yourself.
A savings scheme won’t beat inflation over ten years but it is a good way to start and build up capital.
Whatever you decide, do it now. The chief lesson from one of my favourite books The Automatic Millionaire, is that even small amounts of money saved regularly can build into a sizeable fund.
Sadly, the responsibility for not living in poverty in retirement rests primarily on you as a individual. So do something about it while you can.
Thu, Jun 24, 2010
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