If you’ve got 20, 30 or 40 years of your working life left, you might not think that you need to start planning for your retirement yet, but getting started early is hugely beneficial. If you’re looking to lay down foundations, here are some steps you can take now.
Investigate pensions and employee benefits
If you’re employed, you may already be paying into a pension pot, which your employer is also contributing to. If this is the case, make sure you understand the terms of the agreement and you know how much you’re putting into your pension each month. Read the terms and conditions and consider increasing your contribution if you tend to have money left over at the end of the month. If you’re self-employed, it’s important to investigate the options open to you and to find a pension that works for you. If you’ve been paying into a private pension, read the small print carefully and make sure you haven’t been mis-sold a pension. SIPP claims are increasingly commonplace. If you were advised to move your money into an SIPP (self-invested private pension), and you believe you were given inaccurate or unhelpful advice, you might be eligible to claim compensation.
Budget
Budgeting is one of the most effective ways to take control of your finances and it will stand you in good stead for years to come. With a budget, you can set spending limits, set aside money for your savings account and plan for the future. Use your budget to compare your income with your outgoings and calculate how much disposable income you have. If you have money left after paying your bills and household costs, you could transfer cash to your savings pot or to a retirement or an emergency fund. When you draw up a budget, make sure you include every cost, and try to use accurate figures, rather than estimates. Update your budget as you go.
Clear debt
If you’re in debt, it’s wise to try and clear it as quickly as possible. If you have credit cards, for example, you might be paying a lot of interest, which makes it more difficult to get back into the black and start saving. Check all your accounts and balances and note down all your outstanding debts. If you’re paying back a loan or a mortgage, and you’re meeting the deadlines, carry on as normal. If you’ve got additional debts, which are costing you money in interest or late payment fees, tackle these as a priority. For those worried about money and spiralling debts, it’s wise to seek expert advice. There are solutions available if you’re anxious about missing payments, you’re falling behind with your rent or mortgage, or you’re resorting to using credit cards.
If you’re in your 20s, 30s or 40s, retirement may seem like it’s a lifetime away, but time flies. It’s never too early to start planning. Taking steps to clear debt, save money and boost your pension pot now will benefit you later.
