When people think of retirement, they imagine it will be an opportunity to have more freedom to do things they want and to enjoy themselves. The harsh reality is that if you haven’t saved enough during your working life, you may not be able to afford to give up work. If you do, your choices may be stark. Not whether to fly business or economy on a winter getaway but whether to eat or heat at home.
Saving for your future self, whether you are 25 or 50 is important. Starting earlier is beneficial, and in recent years the focus has shifted – younger generations are starting to save more as the working landscape changes. But don’t think you have missed the boat if you are at the middle to end of your working journey. It is never too late!
Whether you are working and living in your home country or are an expatriate living overseas, saving as much as you can afford, regularly, will help soften the potential threat of pensioner poverty. You may have a shorter investment window, but you still have lots of things working in your favour:
- Hopefully your children have left home, and you have more disposable income. This means you can reasonably afford to put much larger regular monthly amounts into your pension fund. Now is the time to put your needs first.
- As we are all living longer, it is highly likely that we will be working for longer. This means you can still make regular savings for 10 to 15 years, which is a decent length of time to make an impact.
- If you are a local national paying into a local scheme, you commonly have the benefit of tax relief on your contributions and often some form of tax-free lump sum when you retire. This helps put ‘free money’ into your pension fund. Find out what the maximum amount of tax relief on contributions is per annum and take advantage.
- If you are an expatriate, it is often the case that you only intended to work overseas for a short time, but 20 years has passed, and you are not paying into your home country’s social security system, and you do not intend to stay in the country where you are working. It is imperative that you save now because you are at real risk of pensioner poverty. Sovereign can provide an international personal pension plan that can move with you. If your employer does not offer a workplace international pension plan, you can ask them to pay directly into your international personal pension plan. If they do have an international pension plan you can transfer the money into your personal pension plan when you leave them. This gives you portability, flexibility, and is an easy option to help you save.
- £/€/$ cost averaging: Pound cost averaging Tutorial
- Compound growth: Compound Growth Tutorial – The Sovereign Group
Don’t stick your head in the sand. We all want to have some choice on when we retire and some choice on how we will spend our retirement. Don’t delay. If you have a suitable workplace pension, join it. If you need a personal pension plan, source one fast. Sovereign Group provide domestic and international pensions, both occupational and individual, in various locations. Contact us today.
