Saving for retirement is something that most of us put off because of other commitments. But the reality is that the sooner you start paying into a pension the higher your income in retirement is likely to be.
If you’re working you’re usually building up the right to a basic State Pension – and possibly an additional State Pension – but these may not be enough to give you the standard of living you want. So you’ll need another source of income as well.
This section will help you to understand the benefits of using a pension to save for your retirement, what pensions are available, how they work and how to start saving for your retirement.
What is a pension?
Pensions are long-term investments with special tax rules, for example you get tax relief on contributions. This means that the taxman tops up your contributions so your pension fund is credited with more money than you actually pay in.
You can generally access the money in your pension fund from age 55 and you don’t have to stop working to do this.
Pensions you get from your employer and pensions you start yourself have certain differences. Make sure you understand what’s available to you and how they work.
Retirement plans, in simple terms, can be defined as those plans that guarantee fixed income after your retirement. They aid in creating a retirement corpus. This corpus is then invested to generate post-retirement money flow, thus creating a financial cushion and helping in risk mitigation. The money is rolled out in the form of monthly pension. All in all, these policies help the insurer in achieving the financial goals of long term nature.