The Big Drop – Have You Thought About A Pension?


Some years ago, one of the financial institutions ran an ad that asked, “Are you ready for the big drop?”

The big drop was, of course, the gap between our income before retirement and after retirement. The point being made was that some people have insufficiently provided for their pension.

piggy bankAre you one of those? Have you got a plan in place for when you are no longer willing or able to work? Have you decided how you would like your retirement to look, or are you struggling to meet your day to day commitments, with nothing left over to put aside for a rainy day?

The impact of the recession on investments has left some people with less than expected to look forward to in their future, at a time when they would hope to be able to relax and take it easy.

Employers are bound by law to make a pension fund available to you, even if they don’t contribute to it, but there’s no requirement for a self employed person to do it for themselves. When we first set out to start a practice, every cent of costs and income count, so often, there is little left over for putting into a pension fund. Later, we may not make it a priority, and if we don’t, we will find ourselves having to make do with the state pension.

A pension fund will give most return the earlier you start to contribute to it, ideally it is started while you are in your twenties. The later you leave it to start, the more expensive it will be to provide you with a reasonable income when you come to collect.

If you haven’t thought about it before now, maybe this is the time to ask your financial advisor or your bank manager about how you might provide for your future. Did you know that contributions to an approved pension scheme may be tax deductible? That means that it may not cost you as much as you might think. And when the big drop comes, you’ll be glad you were thinking ahead.

 

Save