Pensions are for old people

Type pension or retirement saving into google and the chances are the first images you’ll be confronted with, are smiling middle aged or elderly people poring over pension statements. Or if you’re lucky, cartoon images of smiling older people poring over pension statements, with few variations in between.

It’s a similar picture with much of the marketing literature that lands on our doormats once a quarter, most of which ends up shoved in our bottom drawers unopened.

In short: the pensions industry has an image problem, and it’s one that’s characterised by age. For many years, few providers successfully managed to engage the next generation of pension savers, instead opting to appeal almost exclusively to those people on the brink of retirement or having retired already. Yet for those people who arguably need the most help,

the silence has been deafening.

This coupled with tough economic conditions, an affordable housing shortage forcing many of us to delay making more concrete plans and a raging cost of living crisis threatening to compromise the quality of life for many, the idea of saving for the future may seem to be an unwelcome reminder of just how fragile the present may seem.

It’s no surprise, then, that pension planning has been relegated to the bottom of the to do list, while the idea of pensions as the preserve of the old, has captured public imagination, threatening to completely derail any hopes of us making proper provision for the future.

Yet to ignore it would be a mistake.

Here are five reasons why saving for your financial future, is such an important part of your financial present:

1.With an ever-rising state pension age, most of us will be lucky to retire much before 70. Unsurprisingly, lots of us hope to finish working sooner than that. If that’s you, you’ll want to make sure that you can afford to do so in comfort. With a current state pension payment of just £203.85 a week, the only way to achieve that will be to pay into a private pension too.

2. While the YOLO (you only live once) lifestyle may seem attractive today, it’s not just your own quality of life you’ll be securing by making proper pension plans today. Just like other assets you’ll accrue over your life, property, art, other investments, pensions can be transferred to loved ones as part of their inheritance too.

3. With recent changes to UK pension rules, not least the lifting of the pensions lifetime allowance, there couldn’t be a better time to save tax efficiently for retirement.

4. Common investment wisdom encourages us to take a long-term view when it comes to growing our money, in order to benefit from the power of compounding and there couldn’t be a longer-term investment than your pension. There’s a reason why Einstein referred to compounding as the eighth wonder of the world, commenting: “those that understand it earn it, those that don’t pay it.” Saving into your pension is a perfect way to make sure you’re earning yours, even while you sleep.

5. One of the biggest worries most of us have about retiring is that we don’t have enough disposable income to make contributing into our pensions worthwhile. The truth is, like with saving for most things, the earlier we start the better, however small the amount. And since the time will pass anyway, why not make it really count?

Our peak earning years are the time for us to feather our nests for later life in recognition of a time when we simply won’t have the capacity to. And if the vision for yours includes living out your golden years in comfort, you might want to do something about it starting now.