When Should You Start Planning for Retirement?

Retirement planning is a vital part of family and financial planning for adults of working age, no matter their age or circumstance. State pension allowances are of such a size that they can only be supplementary, particularly against the increasing costs of living. Subsidising a state pension with privately-saved funds and financial products is wise, but when should you start doing so?

Current Retirement Planning Trends

As it stands in the UK, retirement planning has fallen low on the list of priorities for much of the working population. This is particularly true of the younger members of the working population, for whom a combination of factors has led to decreased interest or urgency in planning for later life. Recent statistics have pointed to a marked increase in the number of young workers failing to put any money aside into a pension fund for retirement purposes – with over 1.4 million currently failing to do so.

The rising value within this statistic is a direct result of the cost-of-living crisis, with many workers struggling to make ends meet and choosing to opt out of contributing to their pension fund. More generally, a negative outlook on the future of society in the UK has begun to catch with younger generations, who see retirement as unlikely in the face of rising retirement ages and the fragility of the state pension.

Never Too Late to Start

Though the prevailing mood regarding the nation’s social and economic future is bleak, this mood is not reason enough for an individual to betray their own long-term financial wellbeing. Decisions to cease paying into pension pots are also facilitated by a reduced overall knowledge of how pensions work, and their essential importance to boosting an individual’s buying power in a presumably-inflated future economy.

The reality is that there are two ‘best’ times to start saving for later life: at the start of your career, and today. The sooner you start putting money back for retirement, the sooner it can work in your favour – particularly where compound interest can apply to high-yield savings accounts. The more you are able to put away in your pension, the more you will access after retirement thanks to tax exemptions and workplace pension-matching.

Solidifying Your Retirement Plans

Saving money in a pension pot is not enough of a retirement plan for the average individual, though. In order to properly plan out the framework of life after work, one needs to understand their post-work needs – that is, the costs they can expect to pay each month, and the time at which they intend to retire. Additional financial products can then become a part of proceedings, where something like equity release can enable swifter access to value already held in a home.

Planning for retirement in the here and now, then, should take the form of a checklist that starts with three questions: what monies do your currently have available, what monies do you anticipate having available after retirement, and what do you want your quality of life to look like in retirement?