The thought of retirement isn’t anything that young people worry about early on into adulthood, but with the ever-changing age of official retirement in the UK, and the economy the way it is, younger and younger people are being forced to consider plans for retirement. We always think that we have much more time than we actually do, and it is important that you consider your pension and retirement plan as soon as possible. There were government changes in pension legislation back in 2012 that have certainly improved the situation for workers across the country, but it is important that you take the lead and have control over your future financial life, as well as your present.
What options will you have open to you in older age in terms of financial support?
The first is the State Pension, which everyone is entitled to. As we work through adulthood we are paying tax and national insurance through our pay packets and annual self assessment. From this pot of money the Government provides you with a state pension, which is drawn on from a certain age (which continues to change). Due to the age of state pension increasing it is important to have other options in place to help you out at an older age.
The government changes mentioned above came into play in 2012 and were aimed at improving the workplace pension. It is now obligatory for employers to offer all employees a workplace pension of some kind. You can choose to opt out of a workplace pension, but you do have to be offered a pension at the very least. There are a few different sub categories of workplace pensions to consider.
Defined Contribution Pension Scheme – Your contributions are invested to provide a high return on investment. There are risks but also tax benefits attached, as there is no guarantee of returns on any investment.
Final Salary Scheme – This pension scheme is linked to your salary, with your pension payment increasing as your salary does. Upon retirement you are given an amount linked to your number of years within the scheme and salary at the time of retirement.
Automatic Enrolment – Your employers take money each month from your wages to pay tax, and they match your contribution.
If you ever find that you are short of money during your working life however, there are a few options open to you. The first of these is to ask friends or family members for a personal loan. If you are lucky, someone will have enough savings to help you out of a short-term fix, interest free. Alternatively, you might be able to ask your boss for a cash advance. The other option is to apply for a payday loan through a short-term loan company. Borrowing a small amount of money until your next payday.
All of these options should only be pursued if you have been hit with an emergency situation or face an unexpected cost that was unforeseen. Payday loans are not as volatile as they once were, with responsible lenders providing a top-notch service that doesn’t hit you with hidden fees and charges. Instead, you can borrow money for a short period of time without it having a massive impact on your finances over a longer period of time, as would have been the case in the past.