It would probably be fair to say that planning for retirement is not the top priority for many people in their 30s. That is a decade when most people are focusing on things like maximising their career opportunities, rather than thinking about what they will do once they stop working.
It is not just about that though. Rising living costs in the modern world can mean that just coping with day-to-day life is enough to worry about for many during their 30s. However, there are small steps that can be taken to prepare for the future without landing yourself with more outgoings that you can afford. Starting to plan now will also give you peace of mind about your financial future.
Read on to learn how you can begin to plan for retirement during your 30s.
Talk to a professional
The first step in mapping out your retirement at any age is to talk to an expert on retirement planning in Shropshire or wherever you are based. It is particularly important if you are starting to plan early though, because you are less likely to have a firm idea of what you want from retirement. You need to have some grasp of your preferred lifestyle before you can plan, because otherwise you cannot know how much money will be needed.
For an average comfortable retirement, the savings needed are currently estimated at £215,450 minimum, so perhaps you can start to see why beginning to plan and save early is such a good move. Your retirement planner will find out what sort of post-working life you dream off and help you strategise to make it financially achievable.
Raise your pension contributions
If you are a salaried employee, there is a good chance that your employer enables you to pay into a pension from your wages each month. Of course, it is a very good idea to take up that option, but you should not let it stay static throughout your working life. Okay, you may be contributing the most you can possibly afford right now, but that is unlikely to remain the case forever.
Living costs will not always be as high as they are just now and your earnings will rise as you move upwards in your chosen career. Each time you get a pay rise you should look at increasing the amount that you pay into your workplace pension pot. Tax relief can be claimed on these contributions, which will reduce your liability and boost your savings.
Look beyond cash savings
Some people choose to save towards retirement using personal savings accounts alongside – or as an alternative to – an employee pension. That is not an inherently bad idea, but cash savings held in this sort of account can be negatively impacted by external factors like low interest rates and high rates of inflation. The best way to save towards your post-working life while also guarding against those savings being eaten up by inflation is to look beyond cash.
In practice, that can mean investing your money in assets like shares, stocks or bonds. Talking to a professional financial advisor about the different investment options that are open to you will be the best way to move forward with that. Stocks and shares can be higher risk than bonds, but they also have the potential to increase your earnings much more from the investment. Therefore, which investments to go for will depend on your tolerance for risk.
Unite any pensions you have
The days when people stayed working for one company throughout their lives are mostly in the past. This means they can end up with multiple pensions from different companies as they pursue their careers and that can make planning for retirement more confusing. Taking advantage of pension transfers to bring them all together will make it a lot easier to keep track of how much you have saved.
If you do decide to transfer all of your pension savings, you should bear in mind that it can be complicated. Among other issues there can be charges for transferring your pension from one company to another. For that reason, it will be better to speak to your financial advisor before rushing into anything, if you are not sure of what any charges might be.
Take advantage of tax reliefs
There are tax relief options available for people who are saving towards retirement. Whether you are looking to make sure that tax liabilities do not eat too far into your savings or to cut the inheritance tax that would have to be paid by your family, getting advice from someone with real tax expertise will help with that.
These are five ways to start planning for your retirement during your 30s. Talk to a financial advisor for more detailed guidance.
