Have you ever heard that when you save money, the money will save you? Well, you just heard that.
The importance of saving cannot be overemphasized, whether you are saving for a house, a car or the education of your children. Savings in whatever way is REWARDING!
Saving for the future and life after work(retirement) is even more rewarding, as it provides you with pastries when the ‘Baker’ is gone.
If you want more money to save for the future, you have to understand your current spending patterns and habits to inorder to get there. You don’t keep attending to all the needs that call for your attention and expect to achieve your financial goals.
One way of ensuring you prepare for your future and life after work(retirement), is by having a savings account mapped out for that. There are dozens of excuses that people use for not saving for retirement, and they all sound good but not better than the fact that they need to save against all odds.
It’s up to you to build up a retirement savings pot on the course of your working life. Saving for retirement is essential if you desire financial freedom in your later years after active workforce.
How should I save for retirement?
Pension funds – this is a tax-efficient savings vehicles with which you can only access at 55 or above – it is the most popular way to save for retirement.
Pensions offer tax relief on the money you pay in as well as your returns, and come in two forms: workplace and personal.
A workplace pension – also known as an occupational or company pensions – is a way of saving for your retirement that’s arranged by your employer.
The big advantage of pensions of this kind is that your employer contributes to the fund as well as you, with most companies paying in between 3% and 10% of your annual salary each year.
Ideally, your total pension contributions should top this up to around 15% of your salary to ensure you have enough saved up by the time you retire.
You do not have to limit yourself to your workplace scheme, however. Many people also take out a personal pension, with which you pay regular monthly amounts or a lump sum to a pension provider that invests the money on your behalf.
Personal pension payments can be altered as your income changes throughout your working life, while the provider will usually offer a range of investment funds – giving you greater investment freedom than with a typical workplace scheme.
A Self-invested personal pension (Sipp) offers the widest investment choice. But whatever type of personal pension you choose, it is vital to shop around and compare both charges and investment performance.
Many people also use the Individual Savings Accounts (ISAs), which is a more flexible way of saving on your own pace.