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Best retirement plans for late starters

Paying into a pension is expensive but it’s something that’s necessary for nearly everyone in the country. If you’re in your 50s and approaching retirement without any plans, you’ll need to act fast. People live longer now than ever before so you might need more set aside than you’d bargained for. Selling a property and downscaling is one way of releasing capital but we outline the best retirement plans for late starters so you don’t have to panic and chuck your money at the first pension scheme that comes your way.
    Wikimedia commons - Ian MacKenzie

Assess your financial situation

The first thing you should do is to assess your current financial situation. You should have a good idea of your income and expenses but if not, check those out and make a note. The next thing to do involves tracing any pension schemes from previous jobs. You’ll need to get in touch with previous employers for this information but that shouldn’t be hard as most firms will have a website that lists their contact details. If you remember a private pension scheme that you were involved with, you’ll have to get in touch with the government’s Pension Tracing Service. You can find details about it through gov.uk.

Realistic retirement income

Now that you know where you stand, work out how much you’ll need to be comfortable through retirement. Typically you’ll need at least 25% of your final salary to meet your bills but of course the percentage differs depending on the wages you are on, the bills you have to cover and your own expectations of retirement. Be careful not to underestimate how much you’ll need. If you overestimate, you’ll have surplus to always err on the side of caution.

State Pension

Most of us don’t want to rely on the state pension but don’t overlook it as it’s a large part of most people’s retirement plans. When you combine a state pension with tax credits and a second state pension, the government schemes actually contribute quite a chunk of your monthly income however what you’ll receive depends on the number of years you contributed National Insurance. You’ll need 30 qualifying years in order to get a full state pension.

ISAs

Once you’re aware of how much you can contribute each month and how much you’ll need to add to your retirement pot, start paying into a pension scheme. The tax breaks make a pension scheme the best way of saving for retirement but they’re not the only way. Tax breaks on pension schemes are limited if you’re a late starter as they’re designed for long term investments and once you exceed £40,000, you have to start paying tax on your savings.

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