There’s something about the term ‘retired ‘that gives people cold shivers. Most people are even haunted, and if some brilliant scientist comes up with a solution to ‘help you remain in your 30s’, you’d be surprised by the ‘magic solution’s ‘demand rate.
According to research, the most frequently cited fear of retirement is outliving savings. 52% of all workers, both young and old, have continuously noted that they fear outliving their savings and investments, whereas 42% are paralysed with anxiety that they won’t be able to meet their basic financial needs.
The reality is that these are rational fears. Who wouldn’t be terrified of running out of capital when you’re too old to run after clients or even remember how to make those Frikkadels that a young couple ordered? And not to mention the rising medical bill costs due to the heart issues that you developed due to your obsessive-compulsive disorder (stemmed from thinking about how to survive in retirement).
Well, lucky for you, today there are plenty of investment options that you can make to ensure you have an incredible retirement. One of these options is investing in a pension fund1 that will allow you to capitalise your assets in tremendous investment opportunities further.
So, what constitutes a good pension pot at 50, and how exactly do you identify a good pension plan to grow your pension fund? Here’s a comprehensive guide to help you understand more about pension pots.
What Does A Good Pension Pot Entail?
It’s challenging trying to denote what a good pension pot looks like as there are several factors that you need to take into account. It depends, for instance, on your age, the type of pension plan you have, what age you hope to retire and the amount of cash you think you’ll need when you bid the working years goodbye.
Nonetheless, that’s not to say that there are no tips to consider to help you grow your pension pot to what you think will help make your life in sunset years novel-worthy.
With that said, here are some tips for implementing to help you to turn your pension plan into a ‘good pension pot at 50 UK’.
It’s never too early to start saving for your retirement. If you have a steady job at 25, start setting money aside then. It’ll allow you to make manageable payments every month which will add upon in the long run. When you start paying into your pension later in life, to achieve the set goals, you’ll need to pay larger chunks of money which will affect your financial state.
Another perk of saving in your 20s or 30s is you can invest your pension in riskier sometimes more rewarding investments2. It’s because even if the worst happened and you lost the investment, you’ll still have time to recover.
Did You Get A Pay Rise? Put it in Your Pension Pot
Most people get a pay rise and immediately move into a £20,000 per month apartment. Living large might look flashy, but you also need to remember to save more. The best way of diverting that extra cash is by putting into your pension pot so that as soon as pay packet increases you don’t squirrel more away. Moreover, most incredible pension providers will enable you to make lump sum3 payments in addition to regular pension contributions.
Make the Proper Calculations
Based on your current lifestyle, you can probably project how you would like to live when you retire. It’ll allow you to figure out approximately how much money you’ll need when that time comes.
By doing these calculations, you can then divide this total sum annually and then monthly, keeping in mind the number of years you have before the retirement age. The math will also allow you to figure out how much per month you need to contribute – this will be especially helpful to those with defined contribution pensions.
Choose the Right Pension Plan And Provider
It might sound like a no brainer, but you need to be very careful when choosing your pension plan and the provider. You need to know the difference between the various pension products to enable you to pick the one that best suits your needs. Additionally, it would help if you asked your pension provider about their fees, investment options and risk management strategies.
Having this information is essential because, if your money is invested correctly, it’ll help grow your pension fund. If a pension provider’s fees are too high on the other hand, they’ll eat into your savings drastically reducing the amount of money you can access on retirement.
Individuals who have been making their payments to the National Insurance Service4 for at least ten years are eligible to a state pension. However, the amount given by the state won’t be enough to sustain you. Therefore, you have to build your pension pot on the side. That way, you can comfortably retire and live off your years of hard work.
A good pension pot amount is simply one that’ll fund you to live like royalty when you retire. It’d help to keep in mind that the ideal pension pot will vary depending on the needs of a person.
To build a good pension pot you’ll need to consider how old you are now and when you need to retire, the amount of money you’re willing to set aside monthly, and how much you think you’ll need on retirement.
You’re free to access your pension pot when you get to 55 years. If you plan to retire at this age, you need to have £650,000 set aside.
However, the more money you have in your pension pot, the better for you. It’s why most people push off their retirement to about 60 years. It gives them extra time to add to the fund.
Well, based on figures by the Financial Conduct Authority, the current average amount sitting in pension pots after a lifetime of saving is £62,000. In total, approximately 645,000 persons gained access to their pension funds for the first time in 2018-19.
Well, in reality, the average UK adult targets to have a pension pot of £355,000, which would produce an estimate yearly income of about £13,000, and for some £20,000 below pensioners ‘desired income amount.