On 5th March 2019 Kylie Jenner was announced the world’s youngest billionaire at the age of 21, beating the Facebook co-founder and CEO, Mark Zuckerberg who achieved his billionaire title at the age of 23. A retirement age that most of us can’t even imagine, as it’s a time when our working lives will have just begun.

In a world full of Kardashian’s, tech tycoons and social media only a tap away the current climate is one that’s keeping us distracted. We find ourselves getting absorbed into the successes and tribulations of celebrities and entrepreneurs. Watching them rise through the digital jungle and the ease of which we can connect with them makes us feel like they’re our friends and they really care about us.

 

pension planning

 

The only thing we’re not connected to, is our own lives and cold hard facts showcase this more than ever.

A survey carried out by Finder.com stated that;

• 35% of respondents either have no pension or are unaware that they have one. This is the equivalent to 18.4 million Brits.

• Of the 65% that do have a pension a further 12 million people are unsure whether they have enough funds to be able to support themselves in their retirement years.

• Which means of the 52.8 million people in the UK of working age, 30.4 million either do not have a pension or do not know how much is in it.

 

So, what exactly is the future reality these 30.4 million people are facing?

pension plan

 

An article by the guardian stated that 1 in 3 millennials will never own a home and they will become the official ‘generation rent’. For those that do get on the ladder, the increase of property prices in the UK has meant that deposits are higher and the average age of someone getting on the ladder is now 36 according to figures released by the Office of National Statistics.

Never ending payments in rent and extended periods of time paying off mortgages and student loans is enough to leave anyone feeling bleak and dismayed about the future.

https://www.theguardian.com/money/2018/apr/17/one-in-three-uk-millennials-will-never-own-a-home-report

Is it possible to change this impending doom and how can it be done?

 

Facing Reality

pension plan

 

For those with no plan for their futures, facing reality is the first step and a hard pill to swallow, but it’s essential if we wish to change the impending prospect of struggling during the years, we should be reaping the rewards of our efforts. The longer you wait, the harder it will become and less you can do to reverse the effects of ‘burying our heads in the sand’.

Whilst it may seem so far off, our age of retirement comes along quicker than we expect. If you’re between the ages of 35-40 years old, you may be just shy of 15 years away from when you can take out your pension (age 55).

 

What do you imagine yourself doing in your golden years?

pension plan UK

 

Do you see yourself happy and care free taking strolls through the park and going on holiday 2 or 3 times a year? Maybe you imagine assisting your children with a deposit to buy their first property.
Perhaps you see your golden years doing things that are expressions of your passion after having spent your youth working hard.

Or do you see yourself in the situation that will face roughly 18.4 million Brits living off the state pension which is currently £164.35 per week and that’s only if you have a full National Insurance Record.

With improved nutritional guidance and access to health care, we are living longer than ever. For this reason alone, it’s essential we face reality to ensure we take adequate steps, so we don’t fall into the latter category.

“When I was 19, I started a pension and had a couple of endowment policies” Peter Jones, Dragons Den tycoon estimated net worth £435 million (2013).

 

Source: www.peterjones.com

 

“I have both a personal pension and a long-term financial strategy,” he says. “I set up a pension when it was prudent to because of the tax-relief schemes at the time” La Senza Mogul and Dragon Den Panelist, Theo Paphitis, estimated net worth £250 million .

 

 

Let’s create your plan…

 

Step 1 – Know the end goal

With every great plan it’s important to know what the end goal is and work backwards.

The recommended lump sum required for our golden years is between £260,000 – £445,000.

This will mean if we live till 85 years old, we will have between £13,684.21 and £23,421.05 per year to live on provided we take our pension at 66 years old (the age at which we can claim as of October 2020).

Step 2 – Understand which strategies you have available to you to make these figures achievable.

1) State pension: If you are entitled to claim a full state pension you will currently receive £164.35 per week or £8,546.20 per year. Bear in mind you will only be entitled to this provided you have 35 years of national insurance contributions under your belt. Anything less and you will receive a proportion relative to the number of years of contributions you have made.

It’s important to note if at any point in your working career you are unemployed be sure to claim Job Seekers Allowance as this will contribute to your record. There are many reasons someone may not have a full National Insurance record such as low income or illness. For more information and advice on this be sure to call us and one of our advisors will be able to provide further information on your case.

https://www.telegraph.co.uk/finance/personalfinance/special-reports/11415787/Pension-plans-of-the-rich-and-famous-which-is-best.html

https://www.finder.com/uk/pension-statistics

2) Auto Enrolment: So great has become the issue of poverty-stricken pensioners that the government put together an ‘initiative that requires every employer to put their qualifying staff into a workplace pension scheme. This would require the employer to make contributions on the conditions the employee has enrolled and is contributing toward their own pension.

From April 2019, employees must contribute 5% toward their pension and 3% will be paid by your employer, providing a total contribution of 8%.

If you are earning £1,500 per month (before tax) and your company offers salary sacrifice your contribution will be debited from your gross pay. This equates to:

Your contribution: £75 per month / £900 per year.
Your employer’s contribution: £45 every month / £540 per year.

The further advantage of this is that you save tax and pay less national insurance contributions.

By the end of the year you would have accumulated a further £1,440 in to your pension pot.

The benefits you get from your employer contributing as well as the tax relief makes this option one that you should participate in. We understand, the numbers can sometimes be a little confusing, if you would like to know how this impacts yourself or any of your staff, be sure to book a call and speak to one of our advisers who would be happy to assist.

3) Investing

Investing in stocks and shares is without a doubt one of the best ways to take advantage of the power of compounding interest. Stocks and Shares however carry risk and it is important that you understand how this strategy may impact you.

It would be wise and prudent to speak to an adviser who can give information on how this can be fit into your portfolio. For more information on investing, please read our article on how you can invest for as little as the cost of a cup of coffee.

Step 3 – Taking Action

 

pension plan

 

You can read all the blog posts in the world and gather as much information as you can, but the reality of the situation is this; both Mark Zuckerberg and Kylie Jenner have joined the billionaire club is because they had a goal, created a plan and took affirmative steps to achieve them.

Whatever you may think of the youngest of the Kardashian Jenner clan, she could have sat on her family’s wealth and lived a comfortable life. She was in a comfortable enough position to never need to work but she chose not to rest on her or her family’s laurels and chose to make a mark of her own and that she has done.

Every day you delay in creating a solid plan that will ensure you are comfortable in your retirement can add up considerably in terms of a financial loss due to the loss of compounding interest that could have been earned. Do not delay and speak to one of our advisers today.

 

Contact

Tel: 020  7078 8085

Email: hellowealth@gatecapitalgroup.com

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.

 

Contact

Tel: 020  7078 8085

Email: hellowealth@gatecapitalgroup.com

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.