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By Cormac Reynolds
Health improvements and a longer life span have caused all sorts of issues for the Western world and one of the most notable is that governments cannot continue to meet pension demands. We’re living too long and the maths just doesn’t come together any longer, meaning to ensure a good life into later life you need to invest smartly.
State still matters
The amount of money that you pay into the State’s coffers will be the biggest factor in the amount of money you receive when you retire. To get a fullUK state pension a person must pay full National Insurance contributions for three decades. A state pension is the most basic form of pension and though you’ll not live an amazingly exciting life with its proceeds, it’s often enough to help. If you have missed out you can pay voluntary contributions to cover the payments you’ve not covered and this will help with your future state pension.
There has been a decline in the number of companies offering pensions and so if you do get the chance you’re one of a lucky few. Like all pensions, the younger you are when you start and the longer you pay in the better. This leaves more time for the investment to grow and making a salary sacrifice can help with the long term and is also tax exempt. You can also put in money from savings, other investments, PPIinsurance claims and any other financial benefits you’ve received.
Shares can be a great way to help fill up that pension pot; however they are also a risk and this means you will have to be prepared to keep up to date with the latest movements and changes. Currently, shares are doing quite well and the FTSE100 rose by almost 3% in 2012, which is better than most savingsaccounts. Of course, you can also ask for professional help, or just turn it into your hobby – it’s exciting, expensive, but can really pay off if you get it right.
A well-managed wine investment can really offer you amazing gains – up to 18% according to Bloomberg. If you’re a smart investor with an eye for something exciting and a little different, then vino can be a great way to push up funds in that pension pot.
It’s also free from tax and quite low in risk and there are professional investment options too. In fact, the wine industry has gone from strength to strength for decades now, meaning that if you want something that pays well in the long term it could be for you.
Pensions often work on what’s known as an annuity basis – this results in your fund being used to buy a policy that then pays you your pension – a little bit of a longwinded way if you ask us. However, annuities can work well with a little care and forethought and if you shop around you can really get great value.
Pension providers often expect people to take the first annuity that they provide when its pension time – however pushing a hard bargain can ensure a higher pension. On a darker note, smokers, heavy drinkers and others with bad habits often do better as statistically they’re not meant to live for as long.
Pensions are something many people take little interest or care in, however with a little interest, creativity and obviously money you can do well.
About the author: Cormac Reynolds is a writer and journalist and has written for a number of the UK’s top blogs and newspapers.