Growing old has never brought up so much uncertainties. Pensions are becoming increasingly more difficult to understand. The state of the economy means very few of us know how much we will retire with. Furthermore, a lot of us can’t be sure when we will retire as the government tos and fros on increasing the pension age. This has all led to a distinct lack of confidence in the future.
With all this going on, it is understandable that many of us put the future to the back of our minds. The government’s efforts to encourage workers in making the most of pension benefits available to them is getting mixed reactions with the National Association of Pension Funds (NAPF) estimating that around a third of employees would opt out when auto-enrolment schemes start next year. More alarmingly, research conducted by Prudential has shown that millions of working age Britons prioritise going on holidays and cheeky nights out than saving for pensions.
Now, you will be forgiven for not investing in your retirement income. As we tighten our purse strings and reduce spending during these harsh times, putting money in the kitty for the future is a luxury that many cannot afford. Also, as we are predicted to work more years than generations before us, why save money for the rainy day that isn’t approaching anytime soon?
However, the long term advantages of investing early on into your pension should not be ignored for immediate benefits. Now, more than ever, it is important to consider the long term impacts of financial decisions and if we’ve learnt anything from the global economic crisis, it’s that, doing the sensible boring thing when it comes to finance pays off a lot more than taking thrilling risks. Contributing a small percentage to your pension each month may feel like a deep bite into your pockets but creates a better chance of financially secure retirement.
The government’s auto-enrolment scheme is designed to make sure all people of working age are enrolled in a pension scheme and is designed to bypass issues that prevent workers from saving into their pensions. Opting out of the scheme results in employees losing on retirement income that their employer is legally required to provide. As we are all expected to live for much longer than our predecessors, we should do all we can to guarantee that our retirement years are as comfortable and enjoyable as possible. Besides, saving now ensures that we can keep going having those lovely holidays even after we stop working.