How to pump up a pension
Many of us look forward to retirement, that’s hardly surprising. Seeing more of the family, choosing how we want to spend our days and maybe travelling a bit – it’s a terrific prospect.
As with all things in life though, retiring is something that has to be paid for. The state pension is a good base, but most of us will want more than just the basics.
So starting from October, most working people will be automatically enrolled into a workplace pension. The Government is making changes to the law to help us to save more for our retirement.
If you don’t already contribute to a workplace pension and you meet certain criteria, your employer will enrol you in a pension. You can opt out if you wish, but if you stay in, the good news is that extra money from your employer and the Government will add a hefty chunk to your pension pot too.
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Eventually, you will need to put at least 4 per cent of your salary into the pension – your boss will add a further 3 per cent, and the Government another 1 per cent (in the form of tax relief). These percentages do not apply to all your earnings, just to what you earn between £5,564 and £42,475 a year.
But times are tight at the moment, and people are worried about money. You might be questioning how you will find the extra cash to put away every month. The answer is to look carefully at your current spending. You may well be able to make savings in a way you hardly notice.
For instance, let’s look at how you do your shopping. Make sure you only use money-off vouchers that really provide good value. There’s no point in buying something you don’t need just because you have a voucher. Having said that, if you are in the market for some glasses, check out the offer opposite.
Next, where do you go for your shopping? If you abandon the trappings of more upscale retailers and try some low-cost alternatives instead, you’ll probably get the same good quality goods for less money. Your orange juice might be a foreign brand you’ve never heard of, but giving it a try doesn’t hurt if it’s a lot cheaper!
Modern shops encourage us to spend, with carefully positioned displays and tempting 2-for-1 offers. And supermarkets are experts at gently persuading us to buy things we don’t really need. Taking a list when you go shopping could help. Or try shopping online. Some companies offer cheap or free delivery slots at certain times of the day and if you can’t physically walk past items in store, then you won’t be tempted to buy them.
Buying own-label goods instead of brand labels saves lots. You probably won’t notice the difference – except in the lower cost.
Another option is to visit your local market if you have one. The supply chain is shorter, so prices can be much lower. You’ll be supporting local traders and bustling around all those stalls can be great fun.
Rethinking your mobile phone contract is another good way to save money. Many people pay for inclusive minutes and texts they never use. Keep your handset when your contract expires and consider switching to a deal like pay-as-you-go.
It’s also worth shopping around for internet provision – there’s a massive amount of competition out there and it’s unlikely you’ll currently be with the cheapest company.
There’s also plenty of opportunity to save money when it comes to leisure and holiday spending. Do you have a gym membership? Do you actually use it? And if so, are you paying for facilities such as a swimming pool or a sauna that you never actually go near? You might want to change to a cheaper package, or alternatively join one of the new no-frills, low-cost gyms which are springing up across the country.
If you run a car, then there may well be ways you can trim your motoring costs. Petrol and diesel are expensive these days, but you can compare prices locally by looking online at petrolprices.com.
The way you drive can also save fuel. According to the Energy Saving Trust, fuel-efficient driving techniques such as staying in the correct gear, accelerating gently and not braking too hard can make a huge difference.. Every driver doing 12,000 miles a year could save £250.
Other ways of getting more mileage for your money include turning off air conditioning, removing the roof rack and making sure tyres are correctly inflated. Even chucking out the junk in the boot can help – lighter cars use less fuel. Always shop around for car insurance, too. The differences can be huge. And you’ll usually be able to get a better deal on breakdown cover, especially if you look online and check out sites such as comparethemarket.com or gocompare.com
If you want a new car, then try looking at discount car supermarkets, not just local dealers. Buying a demonstration model or a vehicle that’s a year or two old could save you a lot of money – just check its mileage and service history first.
Look also at your TV channels. Are you viewing some of them enough to justify paying for a package? If not, switch to Freeview. You’ll still get loads of choice, and it won’t cost a penny.
Holidays, too, needn’t cost the earth if you plan carefully. Check if you can put your own package together online using low-cost flights and local hotels – it may work out cheaper than a brochure break. If you’re taking the car abroad, then look at using off-peak ferries.
If you can, travel outside of the school holidays – it’s much cheaper, quieter and probably less punishing than in the height of the summer! Going self-catering can mean saving on expensive meals out – and have you thought about camping? It can be really comfortable these days as well as great fun.
You’ll have your own ideas, but these will start you off in helping to pay for your new pension. In the meantime make the most of these vouchers (right) to help you start saving.
For more information about workplace pensions, please go online to thisisbristol.co.uk/payasyougopensions