| If you're planning for retirement soon, you'll be | | | | advantage of your employer's pension scheme. Most |
| thinking of your pensions and finances. | | | | private companies have closed their defined benefit |
| There are several financial questions you should be | | | | (final salary) schemes to new members but many |
| asking yourself at this stage: | | | | companies are encouraging their employees to join |
| * Will you have adequate pension to support your | | | | their defined contribution schemes. |
| new lifestyle? | | | | Take advantage of your employer's contributions to |
| * If you have an occupational pension, are there | | | | your pension fund. This is free money but you have |
| penalties if you decide to retire early? What tax-free | | | | got to be in the company pension scheme to get it. |
| lump sum are you entitled to take and what is your | | | | Your pension contributions are also allowable for tax |
| estimated pension after taking the tax-free lump | | | | purposes to allow your pension fund to grow more |
| sum? | | | | quickly. Maximize your contributions and take full |
| * Are your other savings sufficient to supplement | | | | advantage of this tax benefit. |
| your pension? | | | | You need time to be on your side, so the sooner |
| * Will you willing to cut back on your spending when | | | | you start your pension planning the greater your |
| you retire? | | | | chances of using the power of compound interest to |
| There are loads of other financial questions you will | | | | build a bigger pension fund. |
| be asking yourself at this stage leading to three most | | | | There may be many valid reasons for not starting a |
| likely outcomes. | | | | retirement plan when you were younger, such as |
| 1) If you have been prudent and have been saving | | | | bringing up a family and/or having to pay off your |
| for your retirement for 30 - 40 years, you are very | | | | mortgage. But retirement planning is also important, |
| likely to have an adequate pension when you retire. | | | | so you will need to make some sacrifices |
| 2) If you started your retirement planning about 20 | | | | somewhere. You may have to eat out less often or |
| years before you reach your retirement age, then it | | | | skip your family holiday abroad. |
| is likely that you will not have built a big enough | | | | The first step in pension planning is always the most |
| retirement nest egg to allow you to have a | | | | difficult. Start saving a small amount each month, and |
| comfortable lifestyle in retirement. You may have to | | | | when you add your employer's contributions and tax |
| cut back on your expenses when you retire or take | | | | benefits, your pension fund will grow into a |
| a part-time job. | | | | substantial sum over time. Increase your contributions |
| 3) If you started your pension planning late, say 5 - | | | | when you are able to do so. |
| 10 years before your retirement age, then unless | | | | Although, it is important to consider the financial |
| you are lucky enough to win the lottery or inherit a | | | | aspects of retirement, it is equally important to |
| substantial sum of money from someone, you are | | | | consider how you are going to make certain |
| likely to have to work past your retirement age. | | | | adjustments to your lifestyle and relationships when |
| It is important to start building your retirement nest | | | | you retire from work. |
| egg as soon as possible. If you are working, take | | | | |