Monday 26th August 2019

What's stopping you saving for retirement?

Article By Dave Morman

Excuse No. 1. I’ve missed the boat.

Many middle-aged people who have failed to plan or save for retirement think it’s now probably too late. That’s not necessarily true. While it is clearly true that you’re better off starting at age 25 than 50, it is also true you’ll be better off starting at age 50 than, say, 70. It’s never too late to start. It’s never too early, either.

Excuse No.2. I’m too young to save for retirement.

There’s no such thing as too young to save. If you’re younger than 30, you really have an amazing opportunity. Young people, no matter what their tax bracket, have a significant chance of creating a large retirement fund thanks to the power of compound interest. The principle behind this is that if you keep the interest your money has earned invested you then make extra interest the following year since your overall balance has increased. Albert Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” Compound interest is one of the best ways to grow your money over the long haul—so start while you’re young.

Excuse No. 3. I don’t make enough money to save for retirement.

It’s true some people may struggle to put aside money for their later years when faced with the costs of everyday living today. Hopefully, possibly thanks to auto-enrolment, you will be a member of your employer’s pension scheme so that will help. But anything you can put aside over and above that will be a bonus.

Excuse No. 4. Inflation will hurt my retirement nest egg .

This is partially true. However, while it is true £100 ten years from now will probably possess less buying power than £100 today, the flip side of that coin is also true, and considerably more important: your £100 ten years from now will be worth infinitely more than if you’d never invested it at all! Most would agree that solid investments have a good chance of outpacing inflation.

Excuse No. 5. I’d rather spend my money on something else.

This excuse occasionally sounds like the most compelling reason to avoid saving for the future. We all enjoy using our income to purchase things that make us feel good – cars, gadgets etc., and we may frequently want to use our money to contribute beyond ourselves – charities and loved-ones in need, for example. Contributing to others is certainly admirable but maybe the best way to help others is to help yourself first—the best way to give generously is to have more to give. Investing for yourself first will give you that option.

Excuse No. 6. The stock market isn’t safe.

Well it could be tricky if you are not experienced, but long-term investing in the stock market has proven to be the best way to grow your retirement savings. Over the last 25 years, including 2008’s steep decline and subsequent recession, the market has averaged a rate of return of nearly 11%. and has averaged greater than 9% growth over the past 100 years. The secret is finding a trusted financial adviser with the experience to guide you in the right direction.

Excuse No. 7. I don’t have enough time or knowledge to manage my retirement savings.

That’s probably true and you shouldn’t have to go it alone. In fact it’s best not to try and do-it-yourself. You need an investment strategy formulated with the help of a qualified financial adviser who will guide you and provide as much help as you need.

So… no more excuses. You know planning for retirement makes sense. We can hopefully expect to live longer than our parents and grandparents which may mean we’ll spend a third of our lives in retirement. The State pension is unlikely to provide anything more than a very basic standard of living, so you need to ensure you have an income during those years when you are no longer working.

At Brunsdon Financial our advisers are all experienced and highly industry qualified and are dedicated to helping our clients realise their financial aspirations. Please contact us if you need help and advice.