Saving for your retirement helps to ensure you’ll enjoy a comfortable lifestyle in your older years. Whether travelling or taking up new interests, you’ll need money to fund them.
Think about the age you want to retire and the amount of money you’ll need. There are many types of saving options and in this article we’ll be looking at some of the best.
Take out an ISA savings account
ISAs are a great way to build savings for your retirement. Individual savings accounts allow you to save money without paying tax on any interest earned.
This is a particularly good option if you’re self employed. There is an annual limit of £20,000 in this tax year, so if you’ve a large pot of cash now’s the time to open an ISA.
It’s never too early or too late to start saving for your retirement. We’re all living longer and most of us can expect to live well into our eighties or nineties.
Running out of money and relying on the state pension is definitely something you want to avoid!
You can have multiple ISAs but you’re only allowed to open one each tax year. There are 6 different types of ISA available, but stocks and shares, and cash ISAs are the most popular.
If you’re willing to take a bit of risk, the stocks and shares ISA could give you a good return over the long term. Putting a little extra cash into your ISA every month not only helps it grow, but also makes up for any loses.
Cash ISAs are great for short term goals and fine if you’re nearing retirement. You can get instant access ISA accounts, but if you’re saving for retirement you’re better off getting a longer term cash ISA as the interest will be higher.
If you’re an employee and earn over £10,000 a year, your employer should offer you a workplace pension. They can contribute anywhere from 3% to 10%. Paying into this every month over the course of a few years can soon add up.
This is a good idea if you’re experienced with investing and have a large amount of cash to spare.
If you understand the market you’ll know which stocks and shares to put your money in.
Don’t self invest unless you know what you’re doing. It’s far better to take the advice of a professional rather than risk losing all your money.
Personal investment pensions
Taking out a personal pension is a great way to ensure financial security after retirement. Investing in several different markets can provide a mix of low and high risk.
High risk investments may give you a greater yield, but there is always the risk of loss as well. Combining different types of assets is a great way of managing the risk.
Investing in property
If you have enough capital at your disposal, buying and letting property could be a great way to save for your retirement. Even a small one bedroom flat can yield a good monthly income.
Property is a fairly risk free investment, but you will have responsibilities. Apart from the purchase price you’ll also have management fees and any renovation costs.