There’s no ‘one size fits all’ plan for your retirement, but there’s plenty of resources out there that can help you to construct a cohesive strategy to ensure that you’re prepared for your golden years. You’ll find an abundance of information online about the best practice when it comes to retirement planning, however, there’s also plenty a sea of myths out there that you’re going to have to wade through. To help you to avoid falling for these retirement fallacies, we’ve put together a list of some of the most common myths, to help you to avoid falling for them.
- It’s too early to start planning your retirement
You might be thinking that retirement is something that you can worry about in the future, when you’re further down the line in your career. However, you should avoid delaying planning for your retirement since the earlier you start preparing for the inevitable, the more developed your plan will be. It’s obvious really, but the earlier that you open a savings account and start putting money aside for your future, the more money you’ll have for your retirement. It’s never too early to begin your financial planning journey, as a developed retirement plan will leave you with less stress and worry in later life.
2. I can retire when I’m 65
There is no law in place that states that you have to retire at a certain age. If you’re fortunate enough to have enough capital to retire early, then you’re completely entitled to do so. However, the State Pension age requirements changed in April 2010, which means that you won’t receive your pension until later in life. This means that the average retirement age rose to 68, so unfortunately, you’ll have to wait a few more years to put your feet up.
3. If I don’t have enough capital, I can continue working into my retirement
It’s entirely feasible to continue working into retirement, however, it’s not a reliable fall-back as a source of income. Unfortunately, you can’t predict what the future will hold for you, in terms of your employer and your health, so it’s important that you develop a savings plan as a back-up. In fact, 35% of people are forced to stop working because they encounter health problems and though you might think yourself invincible, the reality is that none of us can anticipate the obstacles that life may throw our way.
4. My state pension alone will suffice
You spend your whole life waiting for your state pension to hit your bank account and provide for your retirement, only to realise that it’s not a sufficient income source to provide for your lifestyle. The reality is, that your state pension alone will not be enough to provide for your retirement, since the new state pension will only pay-out 175.20 per week, which is the annual equivalent of £9,110.40. If you were hoping that your retirement would be filled with lavish holidays and bucket-list experiences, then your state pension alone will not be sufficient and you’ll need to have a savings plan in place, to help to fund your retirement.
5. My workplace pension will provide for me
It’s a legal requirement that your employer provides you with a pension scheme and as of 2012, a law was also put in place that required employers to automatically enrol you into this scheme, when you begin your employment. Auto-enrolment begins from the age of 22 and will be continued to be paid into until you’re 65. Should you work all your life, until the retirement age, it’s still likely that your combined workplace pension and state pension will only amount to around £16,000, which is less than minimum wage in the UK and will only provide for an extremely basic lifestyle.