We live in a time when the state pension age is increasing, the number of DB (Defined Benefit) Pension Schemes open to new members is decreasing, and more and more individuals will rely on DC (Defined Contribution) Pension Schemes in their retirement.
As a result of Auto Enrolment, it’s true to say the more people than ever are saving for their retirement. But the question is, will it be enough? For some, saving for retirement is at the bottom of their “to do” list. Even if it’s on their agenda, they may not be in a position to save as much as they would like.
A question I am often asked is “How much do I need to contribute?” Of course, the answer to that is another question, “What sort of life style do you want in retirement?” And the answer to that can range from “I don’t know” to “I don’t want to change my life style from what I have at present”.
Yes, we can make an educated guess, using assumed growth rates and assumed life styles. But that’s what the are – Assumed!
The best answer is generally, start early, ie in your teens or twenties and give yourself plenty of time to build up a substantial pension fund. Apologies to those of you who have just missed those age groups. But maybe you could encourage your children to start early. Trouble is when you’re a teenager, you’re never going to get old, are you?
Remember, it’s not “the timing of the market”, it’s the “time in the market”.