A recent study by leading think-tank the International Longevity Centre has suggested that people should aim to save a minimum of 11% of their income in order ‘to achieve an adequate retirement income’, which is defined as 70% of the amount earned whilst working. The think-tank emphasises that this is a minimum amount and in fact recommends a figure closer to 20%, particularly for younger adults near the start of their working life. Getting into good habits to save for your retirement can be tough, but here are a few suggestions if you’re not sure how to start.
Make automatic contributions (start now!) – Auto-enrolment has recently been rolled out to aid making automatic pension contributions as easy as possible. With a portion of your pay being taken out and saved into a pension scheme before you even see it, you’ll find it much easier to live off the rest of your salary safe in the knowledge you’re putting a little away each month for your future.
Gradually save more over time – Making small increases to the contributions you’re making will help boost your pension pot in the long term. Aim to raise the amount you’re saving at least every twelve months, or every six months if you’re in a position to do so. Some automatic contribution systems have an ‘auto-increase’ option, making it even easier to regularly save a little more. If you receive a pay rise or bonus, use this as an opportunity to save a little more too.
Take advantage of contribution matching (free money!)– Some employers will match any pension contributions you make, effectively doubling the amount you’re saving for your future. Don’t see this as an opportunity to save less yourself, however, as increasing your contributions even a little will mean your employer will put more away for you too.
Boost your income – If you’re still struggling to put away enough for your future, then you might want to consider increasing the amount you’re earning each month. Have a look at freelance or part-time work and make sure you save as much of your extra income into your pension.