If you're a long way off from retirement, you may not have given much thought to how you'll secure an income in your post-work years. Many people assume that the state pension will be enough to support them, but will you be able to rely on it in years to come? Unfortunately, you may be in for a shock.
According to research from Aegon UK, just 4% of financial advisers think that the state pension will remain in its current form in 30 years' time. Of the 96% who think it'll change, 39% believe it will revert back to means testing (moving away from the single tier format set to be introduced), while 41% expect it to become less generous, and 49% believe that the Government will make further increases to the state pension age beyond those currently planned.
So, in a nutshell, advisers generally believe that the retirees of the future may well have a less generous pension than those of today – and chances are, you'll have to work longer before you're eligible to receive it. This makes it more important than ever to start planning your financial future carefully, because if you don't have a suitable pension to fall back on, it could be difficult to make ends meet in retirement.
"The state pension is a financial lifeline for millions of pensioners in the UK, so it's concerning to see such a resounding number of financial advisers foresee more uncertainty on the horizon," said Duncan Jarrett, managing director of Retail at Aegon UK. "We need to get better as an industry at highlighting to individuals how much they are due to receive, so they can then work out how much private pension they need to make up the gap between this and their aspirational income in retirement."
If you want to be confident that you'll have a comfortable retirement, you need to start planning as early as possible. Automatic enrolment means that more people than ever are signing up for a workplace pension, and if you've yet to enrol, it's time to get in on the action! Saving small amounts towards your pot can soon add up, and having a workplace pension means that your employer will be paying in, too.
You may want to supplement this with a personal pension, or even another savings vehicle, such as a cash ISA. You may have more short-term goals that you want to utilise your tax-free allowance for, but if not, it could pay to start early and use your ISA allowance for this purpose. Whatever you do, start saving now, and you can be confident that you'll have enough money to live on in retirement – whether or not you can rely on the state pension in years to come.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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