Saving for retirement

A decade-by-decade guide

Planning for retirement is essential to ensure you have the financial security to enjoy your golden years. As retirement can be a long way off, it's essential to start saving for retirement as early as possible.

To help you on your journey, here is a decade-by-decade guide to saving for retirement.

In your 20s: Getting started

Being in your 20s can feel like an exciting time to be alive but also daunting. It's never too early to start thinking about your financial future and setting yourself up for success. 

With the proper knowledge and planning, you can easily create good savings habits that will set you on the path towards financial security. Start by setting realistic and achievable goals; whether they include buying a house, starting a business or taking out investments, having objectives in mind will help motivate you to save money now. 

Creating a budget is also vital to staying on top of your finances. Knowing what expenses you have each month will help keep you organised and make sure there's enough left over to put aside for savings. Ensure you know about upcoming bills and other costs to build those into your budget. 

At the same time, remember to enjoy life too! Set money aside to do things you love, such as travel or hobbies. By taking a balanced approach to saving, you'll be able to get the most out of your 20s while still investing in your future financial security.

• Develop good savings habits early in life.

• Budget for saving rather than saving what's left at the end of the month.

• Take advantage of tax-efficient ISAs and Lifetime ISAs.

• Participate in workplace pension schemes.

In your 30s and 40s: Dialling up focus

Another way to make the most of your 30s and 40s in the UK is to take advantage of salary sacrifice if offered by your employer. This is an excellent way to increase your pension contributions while reducing your tax bill. You can redirect this money into your pension pot by agreeing to accept a lower salary each month. This means that while you will be contributing more to your pension, it could leave you with an increased take-home pay as you'll be paying less National Insurance Contributions (NICs). 

Salary sacrifice offers plenty of potential benefits, from reducing NICs payments, pushing back when it comes to paying higher rate tax and helping to maximise employer contributions. Additionally, if you have opted out of an employer pension scheme, you can opt back in and reap the benefits of salary sacrifice. 

Obtain professional financial advice for more information on getting the most out of salary sacrifice in your 30s and 40s. We'll help guide you through any potential tax implications too. 

• Consider salary sacrifice to maximise pension payments.

• Redirect bonus payments into your pension for a tax-efficient boost.

• Seek financial advice to ensure you're on track for a comfortable retirement.

In your 50s and 60s: The last stretch

As you enter your 50s and 60s, retirement becomes a reality. It is essential to consider the best time for you to retire and how much money you will need to do so. Remember that individuals aged 55 or over can start taking money from their pension. Starting from 6 April 2028, the average minimum pension age will increase to 57. This change may affect you differently depending on your birth date.

It is worth considering whether taking money at this stage is necessary for your circumstances, as it may impact any tax implications. Ultimately, careful planning and consideration throughout life will help ensure that you have enough money saved when the right time comes to retire.

You should also ensure that you are up to date with any changes in the law or regulations that may affect your retirement and pension savings. As well as seeking professional financial advice, it is a good idea to keep an eye on government announcements and stay informed about news related to pensions and retirement. This can help ensure you receive the best returns for your investments when the time comes to retire. 

• Determine your retirement goals and assess your progress using online tools and calculators.

• Be cautious about taking money from your pension too early, as there could be tax implications.

• Use the government's free State Pension forecast tool to understand your expected State Pension.

• Top up your pension as much as possible before stopping regular income.

Remember, it's never too early to start saving for retirement. By following this decade-by-decade guide, you can work towards a secure and enjoyable retirement that you can look forward to. And don't forget, a 'flexi-retirement' approach is becoming more common, with many people continuing to work in some form during their retirement years.

Ready to tell us about your retirement goals?

Whether you want to grow your wealth for a retirement income or a legacy to pass on to future generations, we can help you set goals and achieve them. Please get in touch with us to tell us about your retirement goals and how we can help you.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE). 

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. 

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.