Moneybox advises on saving money for retirement
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Wealth Manager Christine Ross spoke exclusively to Express.co.uk about other options apart from pensions that one may look into when retirement planning. Dealing with clients for many years, she has grown to understand people’s biggest worries when approaching retirement. Often when planning for this time of life, people overcomplicate things and she tries to help simplify it.
She said: “Whilst pensions are probably the most attractive form of saving for most people because of the tax efficiency of it, there are still inflexibilities, and all sorts of reasons why they don’t work for them.
“I’ve always looked at pensions, or retirement money as just money for when you stop working.
“At the end of the day, however that is derived, people need money to provide for the spending needs when they no longer earn. That’s the better way I think about it.
“For someone who is self-employed with erratic earnings they might say, ‘I won’t be able to keep up with monthly pension payments and if something goes really wrong, I might need to get my hands on these savings’.
“Although pensions are for when people stop working, if there is a catastrophe, you may need to get hold of the money.”
With most pension schemes available, people are putting money away for the long term.
Private pensions are not accessible until one turns 55, and for the state pension, you have to reach state pension age – which is currently rising from 66 to 67, then to 68.
Additionally, to withdraw money out early, there are usually penalties attached to this which cost people the money they have worked hard to save.
While pension saving may be right for some, Ms Ross explained that there are other avenues of saving that may be better for people who can’t save for such a long term.
She said: “People can use ISAs.
“You can have £20,000 a year; you can put it in cash or have it in stocks and shares or a combination of the two.
“There you go, you can access your money, and all of your profits are going to be tax free, whether it’s interest or whether it’s capital gains. That is relatively generous.
“I would say that can be a real boost to retirement savings.”
Ms Ross stressed the importance of having a diversified portfolio.
By having money in different places, it can only add to creating a better life post retirement, she suggests.
She continued: “There are many other opportunities for people to save.
“Some employers offer Share Save schemes where employees over a period can have tax advantaged savings by having shares in the employer’s company.
“I know a lot of people who when they approach retirement, that becomes an add on to their overall savings.
“Some people also have the ability and means to have buy-to-let properties and they regard that as a very good means of retirement saving.”
When it comes to retirement planning, Ms Ross explained that she can appreciate pensions being the foundation, but that is not what it is all about. “There are other ways to make money. It’s about finding the best way for the individual that is as tax effective as possible.”
She said the main thing is that people have “an asset that’s going to grow, and the ability for that to pay income”.
She concluded: “Ideally, when we invest, whether it’s for a pension scheme, an ISA, or the markets, perhaps through funds, what we are looking for is capital growth, and an income stream.
“It’s not just about your starting income when you stop working from your savings, but it’s how that’s going to grow to keep ahead with inflation so as that base amount grows, it will still give you a pay rise each year in the income in throws off.”
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