Saving For Retirement - Why You Need To Start Now!

If you want financial freedom when you retire, you should start saving for retirement now, if you have not already done so.

Due to good nutrition and healthcare, people are living much longer these days. And because of the longer life-expectancy, you need to ensure that your retirement income will enable you to enjoy a comfortable lifestyle in retirement.

According to a recent research by Scottish Widows, retirement savings have hit their lowest levels since 2006. The drop in retirement savings was blamed on the economic downturn when people place retirement planning lower on their list of priorities.

What are the consequences if you don't take your retirement planning seriously and your retirement savings fall short?

Saving for retirement should be taken seriously. The UK Basic State Pension for 2010-11 is £97.65 per week, and if the Basic State Pension is your only source of retirement income, then it is likely that you will have to take up a part-time job to supplement your retirement income. Worse still, you may have to include "Till death do us part" in your employment contract.

Some saving for retirement questions you should be asking yourself at this stage include:

• Will you have adequate retirement income to support a comfortable lifestyle when you retire?


• If you are employed, are you taking advantage of your employer's contributions towards your pension fund? Use this free money from your employer to build up your retirement nestegg.


• Are you taking advantage of the tax relief on your pension contributions? Let the taxman help you build up your pension fund.


• Are you using the power of compound interest to build up your pension pot? The sooner you start saving for retirement, the bigger your pension fund when you retire. Let time and the power of compound interest work for you.

It is often not easy to save for retirement, especially when you are starting a family and also have your mortgage to pay . It is true that the needs of your family should come first, but you also owe it to yourself to build a decent pension fund.

Some sacrifices will have to be made to enable you to start saving for retirement. For instance, it is a good opportunity for you to quit smoking, reduce pub-crawling or eating out. Have a camping holiday instead of an overseas family vacation for a year or two to help you get started.

Initially, you can save a small amount each month. Take advantage of your company's contributions to build your pension fund. Then increase your savings when your financial position improves.

The most difficult part in retirement planning is taking the first step. Once you have set up your saving or investment account, money will be taken out of your bank account each month by direct debit and you won't need to think about it because they are ring-fenced for your retirement.

Saving for retirement may not be a priority when you are in your 20s because the thought of retirement seems such a distant future. However, in order to build up a decent pension fund, you need to start saving in your early 20s.

It’s vitally important to take action now and save before retiring from your full time job. You can then look forward to this new phase of life with anticipation.

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