Myths about retirement

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When it comes to retirement, there are some ideas that can turn out to be quite different when you examine them closely. We explore five of them.

  1. You can live off the state pension alone
    The current basic state pension is £137.60 per week, or
    £179.60 for the new state pension if you were born on or
    after 6 April 1951 (for a man) and on or after 6 April 1953
    (for a woman). That works out annually as £7,155 or £9,339
    respectively, depending on meeting National Insurance
    contribution requirements and other eligibility criteria.
    This could be enough for those who own their home
    outright, to cover the very basics for everyday living but is
    limiting for those who want to enjoy a more comfortable
    retirement without money worries. As life expectancy
    rises, so does the amount of time we’ll need to fund
    our lives in retirement, including long-term care
    when we’re older.
  2. Matching your workplace pension is enough
    With an occupational (workplace) pension, the overall
    minimum total contribution is 8%, with employees paying
    in 5% of salary and employer contributing 3%. But this
    might not be enough to give you the kind of income
    you’re expecting once you’ve retired.
    The good news is you can back your workplace pension
    up by increasing your contributions if you’re able. Better
    still, some employers also offer to pay more into your
    pension to help build your retirement benefits faster, by
    matching any additional contributions you make up to a
    set level. If you start the ball rolling earlier, the more tax
    relief you’ll receive and the more time your overall pot
    will have to grow.
  3. It’s possible to keep working for longer
    The reality is, even if you wanted to continue working
    either full – or part-time after state retirement age, you
    might not be able to do so. It might be too physically
    demanding or might not fit in with retirement goals like
    spending more time with grandchildren, travelling or
    other pursuits you’ve been looking forward to.
    Getting help from a financial adviser can ensure you have
    your desired level of income in retirement. You’ll then be
    able to focus on keeping busy through hobbies, part-time
    work or other areas like volunteering in your community.
  4. After a certain point it’s too late to save for retirement
    As we’re living – and working – longer than before, while
    it’s true that the sooner you start the better, life doesn’t
    always go as planned so it’s never too late to start saving
    for retirement. Compound investment growth can make a
    big difference to the value of your pension over time.
  5. You can save for retirement without help from an adviser
    Even with the best intentions when it comes to saving and
    investing, doing it alone is difficult. That’s why working
    with a professional investment adviser can give you
    confidence about the direction of your investments. An
    adviser will be able to point out the long-term benefits
    of your investments and how they can pay off for you.
    Speak to your adviser about making the most of your
    pension investments.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

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