They say there are two certainties in life: taxes and death. If you're lucky enough, you can add retirement to that list, as well. A lot of people look forward to retirement, because it means you're out of the workforce and finally have time to relax and dedicate your time to more enjoyable endeavors, like traveling or seeing your family. But in order to retire comfortably, you need to start thinking about that now, and start saving up for your twilight years. But with all the costs of regular, everyday life, is it possible to also ensure a cushy retirement? Here are 4 ways to save for those upcoming years.
Pay Off Debt
Before you can even start thinking of ways to save, you first have to take care of whatever debt you may have. Saving at the same time as paying debt isn't ideal for a variety of reasons, unless you've only got a student loan, in which case, there is no use striving to pay that off. But otherwise, any money you make off your savings will inevitably go into the interest payment on your debt.
So, the first step towards smart saving is to actually hold off on saving money until you can get rid of any debt you may have been saddled with. Once that's gone, you can start thinking about setting up a fund or account for your future retirement plans.
If you don't know where to start with paying off debt, there are plenty of organisations that can help, such as StepChange. You can ask for help or take it upon your self to scrimp to save money for debt repayment, renegotiate your debt, or consolidate your debt for a more convenient repayment.
Set Up A Budget
Is saving is an issue for you and you can't seem to be able to hold onto any money by the end of the month, then perhaps it's time you changed your spending habits and instituted a budget. Budgeting isn't just for people who are broke; it's a smart financial decision that allows you to continue to enjoy a comfortable lifestyle, but without wasting your money, and instead, putting it towards something useful and worthwhile, like retirement.
Make sure to retain your necessities and a few cheeky luxuries, but consider cutting back on unnecessary spending, like multiple holidays, new gadgets and vehicles when there is no need, luxury food, or even expensive daily habits, such as smoking, or eating out. Money Saving Expert can teach you some budgeting tips.
Set Aside An Amount Each Month
Another good idea, if your money seems to fly out of your purse before you can catch it, is to just set aside a fixed amount every month, before you can spend it. Setting up a direct debit for this is ideal, because the money is directed into the account automatically, so you can't forget or choose to spend it on something else. That way, you know for sure that no matter what, you have a certain amount being put towards your retirement every single month.
Pay Into A Pension Scheme
Of course, you can always pay into a type of pension, and there are three types to know about: defined contribution pension, defined benefit pension, and state pension.
Defined contribution pension
This scheme allows you to create a pension pot that grows depending on how much your employer or you pay into the scheme, if you have a good investment, and the level of charges.
Defined benefit pension
You probably get defined benefit pension if you work for a large company or in the public sector. How much you get depends on your income and how long you've been in the scheme. This type of pension secures an income for your entire life and grows every year.
State pension is the type of pension most people get. You pay into it through your National Insurance payments that you make while working throughout your life, having certain benefits, or even raising children. Currently, state pension is £164.35 per week. To qualify for state pension you need to have been on record for at least 10 years, and 35 years to receive full state pension.
In conclusion, there is more than one way to ensure that you will enjoy a comfortable life come retirement age. You just need to pick the right method for you and save your pennies now, in order to benefit from them later, when you won't need to stress about these kinds of things anymore. The Money Advice Service has more information, if you need it.