If you haven’t started saving for later life by the time you have reached forty, now is the time to do something about it.
Ideally you will have something saved up by now, whether that’s in a personal ISA, company pension scheme, or even invested in property.
But if you haven’t: don’t panic. It’s never too later to start saving for later life.
Vision for the Future
It’s a good idea to really start thinking about what your retirement is going to look like. Of course there will always be a degree of uncertainty, but you should be able to gauge realistically what your vision will cost, and what you need to do to get there.
By now you will probably be reaching a peak in your earnings and have a level of financial awareness. This will help to sensibly measure how much you can afford to put away against how much you need to save.
Clear Any Debt
University debts should be paid off by now, but if you have any other expensive or unsecured debt such as credit cards and personal loans, you need to pay this off as a priority. Microsoft Money, or even a standard excel spread sheet can be useful for helping you to build an action plan for controlling spend.
Company Pension Scheme
It’s never too late to start accruing money in a company pension plan, and the great thing about these is that they essentially act as a pay rise. If your company has a plan in place (which most will have to as of October 2012), they will start making contributions on your behalf based on the percentage of your salary that you decide to save.
Try to build up your tax-free savings in a personal account. You need to think about what sort of income you will need to be able to draw once you’re retired, and the strong likelihood is that the state entitlement won’t cover this. Particularly if you’re thinking about early retirement, increase your savings contributions now to bump up your resource in later life.
Don’t be too Conservative… yet
You have several decades for your retirement earnings to grow, so although it’s not advisable to put all of your life-savings into high-risk investments, you still have time to invest a good percentage in carefully researched, proven stocks.
You don’t have time to put off saving any longer. A good way of making sure that you keep on track is by setting strict goals and targets for yourself. Once you have worked out how much you will need to save for later life, it should be easier to start saving because you will have a mental image of your retirement goal in your head.
It’s good to be ambitious about your retirement goals but try not to set unrealistic targets for yourself, as in the long run this will probably be more harmful to your saving potential.
The older you are when you start seriously saving for retirement, the harder you’ll have to work at it, but don’t be disheartened. There’s plenty to do from here to ensure a comfortable later life.
About the Author: This article was contributed by Laura Moulden on behalf of Cheselden, the leading Continuing Care review specialists.