When you’re younger, it can feel like retirement is a lifetime away. Saving for your pension just doesn’t really feel like as much of a priority when you have bills to pay and other financial commitments to think about – you might be tempted just to forget about it.
However, this approach could spell bad news for your retirement as new figures from Which? show that nearly half of workers over 50 don’t feel confident about the amount they’ve got saved for their pension. Let’s take a look at how you could make sure you stay in control of your pension when you’re in your twenties or thirties.
According to the Which? stats, 21% of workers over the age of 50 say they’ve never checked how much they have saved up for their retirement and the same number admitted that they wouldn’t even know how to do this if they wanted to. 58% say they’re worried about how much their pension is worth, and just 27% say they trust long-term investments like pensions.
What’s more, 37% say they find confusing trying to keep track of the different pensions they’ve built up with different employers and 34% say they feel it’s too time-consuming.
Pension dashboard plan
To combat this general confusion and lack of understanding around the pension market in general, Which? has proposed the idea of a ‘pensions dashboard’ designed to show savers everything they need to know about their savings for retirement in one place. This would make it easier to see how much they have saved up and with which employers so they will be easily able to track their pension pots throughout their working lives – and make any changes to the amount they’re putting aside if they want to.
Which? is calling on the Government to use the Spring Budget next week (16 March) to put such a pension dashboard in place, and it’s hoped that this would encourage savers to be more proactive about their retirement earlier in life.
How to save
If you’re in your twenties and you’ve only been working for a few years, it’s likely that you’ve never even thought about setting up a pension. Don’t worry – this doesn’t mean you’ll be left with nothing when you come to retire – you can start putting some money aside now.
However, it’s a good idea to focus on paying off any existing debts before you start thinking about saving for the future. Clear your credit cards and work towards settling any loans you may have – you don’t need to do this with your student loan as it automatically comes off your earnings. That way, you’ll be able to free up more money to live on and then see if you can afford to start saving as well.
When you are looking to save, start by looking at the workplace pension offered by your employer. They may match your contributions up to a point – so if you were to put in 3% of your earnings, they’d also put in 3%. You can find out about the different types of pensions that are available in our blog.