Why pension planning is essential
Retirement feels an awfully long way away until you can start counting down the years in single figures, but pension planning is the single most important bit of financial planning that you will ever carry out. Retirement should be the best time of your life when you are able to enjoy what you have earned and live without worry, but to do this you need to make sure that you have enough in the pot. Here we explore five key reasons why pension planning is the most important form of financial planning.
By understanding the value of your pension you can get into the saving mindset. Putting money aside for 50 years is hard, but when you know how it will grow and what it will be worth you will be able to take pleasure in tucking spare cash away.
Your longest investment
Whatever you do in life, your pension will be your longest investment and it needs to maximise over time so you can enjoy the best possible retirement. When you consider how long you will spend looking at 30-year mortgage options, your 50+ year pension investment clearly deserves more time.
Protecting your assets
Building assets through your lifetime is one thing, but protecting them means having an appropriate pension pot. If you cannot live on your pension then you will need to break your estate down over the years to pay for your lifestyle and keep on top of everything. To enjoy what you have saved in life, you need to have this steady income to keep your daily costs covered.
The current generation will receive a reduced inheritance in comparison to previous generations, which means that saving is more important than ever. While it would have been common to inherit a house in the past, this is an inheritance that can no longer be relied upon and as such, the general wealth of the elderly will reduce. With a pension pot you can protect yourself from this, but without proper planning, you will lose out.
If you only consider one form of financial planning then it should be the planning of your pension and your future income. This form of financial planning will have the greatest impact on your quality of life over time and will ensure that you get the best from your earnings when you retire.
Why pension planning is essential – where to find out more
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