At some point in our lives we’re going to want to stop work and take it easy. But how are we going to pay for this? It’s a wise decision to have some money when this moment arrives.
How to save for retirement
The usual way to save for retirement is to have a private or workplace pension. You might have a workplace pension from your job. These have the extra advantage that your employer pays in too.
Pensions are a tax efficient way of planning for your retirement. This means that you don’t pay income tax on money you put into a pension and you don’t pay tax on how much it grows. When you come to take your money, you won’t pay income tax on a quarter of what you take out.
Your money is invested, so it can potentially grow more than in a bank account. But there’s also more potential risk and you could get back less than you invested. Over time, the aim is that any potential growth counters the risks. This is why investing is a long-term plan. Even if retirement is still a long way off, it's a good idea to start saving now. It can really add up to something bigger over all that time.
How you take money out
If you’ve saved into a workplace or private pension, once you reach 55, you can start taking your money out. You have choices about how you can do this. You can:
What you can do today
If you already have a pension plan, think about whether you’re saving enough. You can top up if you need to.
If you don’t have a pension, have a look at Scottish Widows. Scottish Widows are pensions experts and part of the same group as us. They have lots of information and a handy tool to help you see your options and how much you might get from them. You can see lots of other helpful tips on their Retirement Planning page.
If you already have more than one pension pot you might want to combine them into one plan which has flexibility in how you can take your money. Visit Scottish Widows to see how they can help.
To talk to one of their pensions experts, call 0345 608 0380. They’re available between 9am to 6pm, from Monday to Friday.
Other sources of information:
For free and impartial money advice, visit the Money Advice Service.
You might want to talk to a financial adviser. Find one near you.
The Government are offering free guidance on your options online, by phone or face to face from Pension Wise.