A lot of people are at a loss when it comes to saving up for retirement, even if they are quite savvy when it comes to budgeting, saving, and curbing their spending so that they can ensure a stronger financial future. So, in addition to consulting with experts like those at UK Pension Guru to talk about everything from SIPP, to how much you should put aside for retirement, check out the information below to discover more about what you should know about retirement savings.
You Should Be Taking Advantage of Your Workplace Pension
Does your employer offer you a workplace pension to help set you up for retirement? Then definitely take advantage of it, especially if they offer a ‘salary sacrifice’. This basically means that you will pay some of your salary straight into your pension, meaning you could pay less tax and NI. In return, you can also receive non-cash benefits from your employer such as childcare vouchers, so you benefit in two ways. Do bear in mind that your overall take-home salary will be less.
Diversify Your Savings and Investments
It is a great idea to start saving up for retirement as early on in your career as possible, but it is also really smart to diversify your investments along the way. This means that you shouldn’t only rely upon a single type of retirement savings account to get you the money that you need to cover your expenses once you are older and you stop working. In other words, you should not put all your retirement eggs into just one basket. So, for example, if you are going to be investing in the stock market, diversify your portfolio with a variety of stocks in order to minimise risk when the market fluctuates inevitably.
Don’t Take Loans from a Retirement Account
It might be tempting to dip into your retirement account when you are in need of some extra money but taking a loan out from your retirement savings is a bad idea. That’s because you will be taking money out of the account, thereby eliminating its ability to compound and grow month after month and year after year. In other words, you will only end up setting yourself back in the long run, so it is not worth the short-term convenience of getting access to money when you take out this type of loan. And, on top of that, depending on your circumstances, you might also end up paying taxes or withdrawal penalties if you end up taking money from a retirement plan in the form of a loan.
There are a lot of things that you need to know about retirement savings in order to make the most of them, so definitely consider doing your research and perhaps even talking to a qualified financial advisor who could help you navigate the process of starting a retirement savings account. You won’t regret it, and you will have more peace of mind as you get older.