Making hay while the sun shines
Written by Mark Salter
Summer is a season of planning—holidays, barbeques, days out and family activities all find their place in the calendar. Yet while we spend hours organising a few weeks of enjoyment, many of us leave our pensions and planning for ‘life beyond work’ until it’s just around the corner.
The reality is that pension planning often delivers its greatest benefits when reviewed early. The more time you have, the more opportunity there is to benefit from compounding returns, saving tax and aligning your retirement pots with the lifestyle you hope to enjoy in later life.
Take a moment to ask yourself:
How many pension schemes have you accumulated throughout your career?
Do you actively keep track of them?
How much are you paying for your pensions and are you paying too much?
Are you reviewing your pensions and the contributions you make regularly?
Are you making full use of the tax benefits available through pension saving?
Do you know how your pensions are invested and how they are performing when compared to others?
Do your current pension investments reflect your retirement goals?
Do your existing pensions enable you to benefit from all the flexibility and options when you want to access them?
What would happen to your pensions if you died early and what type of support will they provide for your family?
Just as making hay while the sun shines, good planning is about taking advantage of good conditions today and while time remains your greatest asset. The sooner you review your pension arrangements; the more options you may have to improve you and your family’s future lifestyle.
A great example to show the benefits of time is to look at the difference of someone starting to contribute at age 30 compared to someone at age 45. Let’s say they both contribute £300 per month net from their bank account each month, increasing their contribution by inflation and getting an annual return of 6%. By the time they both reach age 60, they have very different sized pots. Prudent Penny is sitting with £550,000 in her pension compared to a pot of just under £140,000 for hindsight Henry who started 15 years later.
Enjoy the summer but remember autumn will be with us before we know it and preparing early is the key to a memorable harvest.