There are a few things you will need to consider when saving for your pension. One thing you should consider is that the longer you leave it the more you will have to save. You will also need to take into account that the amount you can save depends, of course, on how much you can afford.
What Is My Pension?
You may be paying into a pension scheme from your employer, which come in two types: defined contribution and defined benefits. A defined benefit scheme means that your employer, who is responsible for the pension, will deliver you an income upon your retirement. Defined benefits is a scheme which you save into and your employer contributes to as well. This means, in order to work out how much you will need to save, you will need to match what your employer requires you to contribute in order for you to receive the promised pension when you reach retirement.
A defined contribution scheme will mean that it is down to you to pay into the pension in order to receive enough pension when you retire, meaning the more you save, the more you get.
How much is the State Pension?
At the moment the State Pension is at £155.65 per week, or £8,094 per year. This means that in order to receive a higher level of income per year, you’d need to contribute more to your pension and at an earlier age.
What if I’m not sure how much I should save?
Deciding how much you save depends on how much you wish to receive from your pension. This also depends on your age, as the earlier you start to save, the larger your pension pot is likely to be with lesser contributions each year.
In order to figure out how much you’d need to save, how you’d need to prepare and where you should invest if you wish to do so, it’s a good idea to take the first step by calculating what your income will be when you retire. Another important step in preparing your pension pot for a happy and healthy retirement is to speak to a local pension adviser at KLO to find out more about pensions and how you can help your savings go further.
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