There are many people who have a personal pension and are all set up for retirement but there are also lots of people that do not have one. You may wonder whether it should be something that you should consider getting. It is well worth thinking about this as planning well for retirement can make a big difference. If we do not do this, we could end up in a situation where we are struggling for money when we retire which means that we will not have a good retirement and we could end up being limited in what we can do because of the cost of it. If we are used to not having much money anyway, we might think that it will not matter, but once you stop work, you will have more time on your hands to fill and you will need to think about what you will do and how much you might have to pay out on things to entertain yourself.
Most people will pay into a government pension when they are working. Through our National Insurance payments, we will be contributing to a pension and that means that when we retire we will get regular payments form the government. These tend to be worthwhile, although it is hard to predict how much you may get when you retire. The government tends to treat pensioners pretty well though because they make up a big proportion of voters and they want to make sure that they do what they can to get pensioners votes. If you do not work full time for a significant period of time or are self-employed on a low income, then you may not pay in enough to the pension to be able to qualify for any or you may only get a proportion of it. So, it is worth bearing this in mind and making sure that you do pay in what you need.
Many people also have the opportunity to have a work pension. These can be really good because the employer will pay in to it as well as the employee and the money paid in is not taxed. This means if the money goes directly in from salary it will not have the usual PAYE tax on it. How good the pension is will vary between employers but they are always worth considering. You may think that you are too young to worry about it when you first start working, but it can be a good idea to start as soon as you can because all the money you put in will make a big difference when you retire. Pension funds are invested and if you start paying in young the money will be invested for longer and much more likely to make you more money.
A personal pension is not as lucrative as the previous two but it can provide additional income. It can be the only option for some people if they are self-employed or work for a small company with no pension scheme. There are lots to choose from and it can be quite confusing so many people choose to pay for an independent financial advisor to help them to find the one that will suit them the best.
Some people choose to use other things to fund their retirement, some opt for borrowing money, some rely on their investments. There has been a trend in people buying houses to get the rental income as part of their pension fund. This is because of problems with the stock market performance which has lead pensions not being so well performing and some even collapsing. There are lots of things that you could possibly put your money in to but each has a different risk. If you just save up, then you will not get a big return on the money and therefore you will have put a lot of money in to get enough for retirement. If you invest in the stock market then you will have a better chance of the money performing much better so you have a bigger pot when you retire but if the stock market under performs then it is a risk. You could choose to buy art or antiques and hope that they increase in value enough to provide with a big chunk of money when you retire. This is a risk though because that artist may no longer be popular or the art market in general may be in a slump. There are other things that you could consider investing in as well but the problem with investments is that they are risky and you never know whether they will perform well or not. There are different levels of risk you can take but the only safe way to ensure you do not lose any money is if you save rather than invest and the return is potentially much lower. However, you will have to think about whether this is a risk that you are willing to take or whether you think that you might want to look at an alternative way to find your retirement.