With the cost of living rising year on year you need to look beyond your state pension when it comes to providing for your retirement. Here's how a personal pension plan could help you see out your twilight years in comfort.
The state of state pensions
After working for fifty years you'll be able to comfortably retire and happily live off your state pension; doing all of the things that you dreamed of while slaving away at your desk – right?
If that's as far as you've got to making plans for your retirement then you should think again, especially when you consider that the current full basic state pension is just £97.65 a week for individuals and £156.15 couples.
It doesn’t sound like a lot, does it?
And that’s not even taking into account factors like inflation and the outstanding personal debts many of us will face as a result of getting on the property ladder or starting a family later in life.
Add to this the fact that not everyone qualifies for the full basic state pension and your plans for retirement start to look even shakier.
Your access to a full basic state pension is dependent on the number of years you've paid National Insurance during your working life. Currently you'll need to clock up 30 qualifying years before you're eligible.
This is why considering a private pension plan now could help provide you with a more financially comfortable future.
Who are personal pension plans suitable for?
Unfortunately, the days where a lifetime of servitude with a single company is rewarded with a carriage clock and a generous company pension are a thing of the past.
Employer pensions are becoming less generous and the kind of final salary pension schemes that our parents enjoyed are now few and far between.
The way we work has also changed dramatically. It is now the norm to change jobs or careers more frequently and an increasing number of us are now working on a self-employed basis.
The result is that many of us are unable to join a company pension scheme - and this is where personal pensions come in.
Personal pension plans are suitable for anyone who doesn’t already have a sufficient pension provision in place. Even if you do currently belong to a company pension scheme you can still take out a private pension plan in order to ‘top up’ your pension pot.
Will you be living life to the full or nearing the bread-line?
When it comes to deciding whether a personal pension plan is the right option for your retirement savings the first thing you should do is sit down and work out what provision you have in place already.
You'll need projected values for both your state pension and any company pension schemes you currently belong to.
Then think about your outgoings at retirement age: will you still be paying off a mortgage? Will you have any dependents? Do you want to travel around the world? Do you have any other savings?
Finally ask yourself whether you will be able to live comfortable on just your state pension or company pension when you retire.
If the answer is a resounding ‘no’, then you should review your long term savings plans at the earliest opportunity. Fail to do so now and you could find yourself working throughout your retirement years in order to supplement your state pension!
