Retirement planning for all ages is important. For many people, use the term ‘pension’ or ‘financial planning’ and they will turn off. And yet when you have a workforce who are confident in their financial situation, you will have a more proactive and happier team. Broadstone’s Personal Financial Planning Team have highlighted some of the key ideas that could turn all of your staff onto financial planning.
20-30 year olds
Retirement for them seems so far away it is difficult to engage this group. But getting them to remain opted into auto-enrolment or indeed any work-based pension will ensure they can look forward to a brighter future.
For this age, group visualisation may work better than figures. Particularly if they see their pension contribution as a sacrifice. Perhaps it is – but what are they actually sacrificing – that could be the cost of their monthly Starbucks or Dominoes. Or maybe it’s one night out a month.
It’s useful to highlight that their pension contribution is just a takeaway meal now but in 40-45 years’ time, it will be worth a nice house, a flash car or a fancy holiday.
30-40 year olds
This age group are likely to be well established in their careers, however, it’s also a time of major life changes such as buying their own home. This has associated mortgage pressures, starting a family and the expense associated with maternity/paternity leave, childcare provision and so on.
This is an especially tricky time for women (yes, the pension gender pay gap is an accepted fact). Whatever a person’s gender, it’s really important to try to catch up with any time taken out of work and therefore their pension contributions.
It may not be what they want to hear when they have too much else going on, but when you tell people their life expectancy and number of years in retirement – the penny eventually drops.
40-50 year olds
That thing called retirement which once seemed so far away is now just over the horizon. This is the time to really start thinking about retirement goals. What do you want to be able to do in retirement and when do you want to stop working? This will help employees decide what kind of income they think they will need and then look at what income they will actually have. If the gap is terrifying the good news is that they can still do something about it.
They could start paying more into their pension or even look at opening a SIPP. However, remember higher earners need to be cautious and ensure they don’t get too close to their lifetime allowance savings which will see higher tax eat into their pension savings. As pension strategies are more complicated at this age, it’s beneficial to seek advice from our financial planning service.
50-60 year olds
Well, when did that happen? It only seems like yesterday you started your first day at the office. Consolidation is the key for this age group and again independent and expert advice is worth its weight in gold to ensure pensions are safe and invested securely.
Broadstone will always talk to people about pension scams so they know what to be aware of and what to avoid. There is also the big question about whether or not to take a chunk of their pension pot early.
With so many questions to consider, helping your employees make the right decisions is vital which is why Broadstone Personal Financial Planning is so useful. Pensions freedom is overall a great thing, but sometimes having so much choice can lead to poor decisions that could have a significant impact on the rest of a person’s retirement.