How Much Should I Pay Into My Pension?
“My New Year’s resolution is to do something about my pension planning in 2022. Currently, I am a member of my work scheme. I’m age 48 so I have plenty of years ahead to put money aside into a pension but have no real idea how much I should be saving. Can you help, please?”
2022 may bring its share of both financial opportunities and challenges; it is important to take a proactive approach to your finances year on year and regularly review all your arrangements. This will help you keep your financial planning on track.
A workplace pension is a brilliant way to save for retirement. The government will add an extra 20% on top of your contributions, and your investments will grow free of tax. It is worth mentioning that tax relief is available on contributions up to the annual allowance of £40,000, or 100% of your earnings if less.
When thinking about your retirement, you should consider the kind of lifestyle you would like to lead. You may wish to think about whether you want to continue working, what you would like to do, and what is important to you. Furthermore, when considering how much to pay into your pension, you will need to think about the following:
- How many working years do you hope to have left before you retire?
- How much money do you have saved into your pension?
- How much do you expect your investments to grow between now and your retirement?
- How much will your employer contribute to your pension, and do they offer contribution matching?
Generally, you will want to put as much into your pension as possible, as early as possible. However, this isn’t feasible for everybody. An Independent Financial Adviser can work with you to define your goals and create a plan to achieve them. Your adviser will want to know all about you – financially and personally – so that they can give the best advice that is right for you. Financial advisers use cashflow planning tools to project how your finances will change over the years under different circumstances. You may find that this will help you visualise your financial future and bring it to life.
Any opinions expressed do not constitute advice. The value of your investment can go down as well as up and you may get back less than the amount invested. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.