Saving for Retirement

This guide to saving for retirement is your roadmap to a secure future.

We explain how, when and why you should be saving money for retirement, and answer your questions about how to maximise your retirement savings.

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Important information: Our website offers information about investing and saving, but not personal advice. If you’re not sure which services are right for you, please request advice from Hilltop’s independent financial advisers. Remember that investments can go up and down in value, so you could get back less than you put in.

The benefits of saving money for retirement

Saving for retirement helps your financial future. By starting as early as possible, you can leverage compound interest to grow your savings significantly. Pensions also provide tax breaks to bolster your retirement savings.

All of which can translate to financial security and freedom in your retirement years. You’ll have the peace of mind to live the lifestyle you want, whether it’s travelling the world or simply relaxing without financial stress.

How to start saving for retirement

Start securing your dream retirement today by regularly setting aside a portion of your pre-tax income into a pension. All employers are now obliged to automatically enrol you onto their nominated workplace pension.

However, if you’re self-employed or would like to set aside a bit extra, you might want to consider a personal pension, like a self-invested personal pension (SIPP), for tax-free growth on your investments.

When to start saving for retirement

The best time to launch your retirement savings is the moment you start working. This jumpstarts the powerful effects of compound interest, enabling you to effectively earn interest on your interest.

The earlier you begin, the easier it is to form a regular savings habit and adjust your plan or catch up as needed.

But remember, no matter where you are in life, it’s never too late to start saving. Every bit you save now will put you on a better financial footing for your retirement.

How much should I be saving for retirement?

So, how much should you be saving for retirement? It’s a good question, but there’s no ‘one-size-fits-all’ answer.

The exact amount you should save for retirement depends on a wide range of factors, including:

  • Your desired lifestyle: If you plan to travel or have expensive hobbies, you’ll need to save more.
  • Your current age: Your age will determine how aggressively you need to save to achieve your goals.
  • Your expected income: Online pension calculators can give you a projected retirement income.
  • Your current debt: Clearing high-interest debts is a priority but you should still aim to save (even a little).

How much retirement savings by age

It can be useful to benchmark your retirement savings against average figures for your age. Here are some general retirement savings goals, which are merely starting points that you should adjust to suit your situation and goals:

  • Age 30: 1 x your annual salary saved is a good foundation, especially if you started saving early.
  • Age 40: 3 x your salary saved is a good target, accounting for lifestyle changes and income growth.
  • Age 50: 5 x your salary saved should be the goal, especially if you need to catch up at this point.
  • Age 60: 7-8 x your salary saved puts you in a strong position with retirement around the corner.

Saving enough for retirement

The harsh reality is that many people simply aren’t saving enough for retirement. Recent reports in the FT Adviser and Moneyweek citing the findings of Standard Life’s Retirement Voice Report underline this point.

The average retirement savings target across more than 6,000 people surveyed by Standard Life was £250,000. However, the average figure achieved in reality was £131,000 – a shortfall of nearly £120,000.

More than half (52%) of respondents wished they’d started saving sooner and more than two-fifths (42%) regretted not seeking advice. Start your retirement planning today with pension advice from Hilltop.

Retirement saving options for the self-employed

As a self-employed worker, you’re solely responsible for your retirement savings. However, it’s a fact that self-employed Britons are less likely to be paying into a pension.

Popular options include personal pensions for tax relief and investment choices, stakeholder pensions for lower fees and flexible contributions, and Nest for a government-backed, low-fee scheme. Just remember, you won’t receive the benefit of employer contributions.

The UK government offers tax breaks on contributions, and you may even be able to use unused allowances from previous years. Visit MoneyHelper, Nest or GOV.UK (for State Pension queries) for more information.

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Saving for Retirement: Frequently Asked Questions

There’s no magic number for retirement savings, but experts recommend aiming for 10-15% of your pre-tax salary saved each year.

As a rough guide, aim for 1 x your salary saved by age 30, growing to 7-8 times by the time you’re 60. Remember, these are just starting points.

The sooner you start and the more you save, the better.

Look into tax-advantaged options like workplace pensions and prioritise employer-matching contributions if possible.

Regularly review and adjust your strategy and consider talking to a Hilltop adviser for personalised pension advice that takes into account your State Pension, workplace options, risk tolerance, and financial goals.

Calculating your ideal monthly retirement savings amount depends on your situation.

It can change based on your desired retirement lifestyle, existing debt, and how early you start saving.

Remember that even smaller amounts can grow substantially over time. Talk to a Hilltop adviser today for an accurate monthly savings target.

Self-Invested Personal Pensions (SIPPs) give you more control. You can choose a wider range of investments than with standard pensions, potentially leading to higher returns.

However, investments fall as well as rise in value, which means you could get back less than you invest. Speak to a Hilltop adviser to see if a SIPP is right for you.

Diversification is key. Spread your investments across stocks, bonds, and cash equivalents, and adjust your asset allocation as you get closer to retirement.

Stay invested for the long term to weather any storms and benefit from eventual rebounds. Regularly rebalance your portfolio to keep your asset allocation on track with your goals.

No! It’s never too late to start saving for retirement. Saving for retirement is always a good idea, no matter what age you are and even if you’re starting late.

You won’t benefit from compound interest as much, but any savings you set aside will grow and give you a financial buffer in later years. Think of it as ‘better late than never’.

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