Prudential recently revealed that the cost of living for pensioners is rising nearly 50 % faster than the current rate of inflation and many are struggling to save.
The average pensioner with savings holds nearly £20,000 in interest paying accounts. However with the Bank of England base rate remaining at a historic low of 0.5%, the low interest rates are taking their toll on pensioners savings.
Having a financially secure future and living in retirement comfortably is a priority for 58% of UK adults yet 4.3 million households do not have any savings at all.
If you are concerned about future financial security, here are some tip tips for retirement.
1. Company Pension Scheme
Whilst many members of the public sector have recently have been told that their pensions will be slashed, those working in the private sector fail tot take advantage of company schemes. Those looking to join a workplace pension scheme should try to save 15 to 20 % of your income to increase chances of a comfortable retirement. Choose the appropriate fund for you, if your in your 30ís for example, you may wish to look at a high growth fund.
2. Tax free savings and interest
The Joseph Rowntree Foundation’s Minimum Income Standard report found that the smallest acceptable level for retirees to life off is £14,960 a year so it may be worth looking tax free savings methods to acquire interest on your funds.
ISAís can be a very useful savings account with many benefits. They are one of the few methods of saving which allows you to get instant access to your cash and enjoy protection from Government tax. You can save up to £10,200 a year across stocks and shares ISAs and cash ISAs. There is, however a maximum limit of £5,100 which can be saved into a cash ISA per year.
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3. Personal stakeholder pensions
Stakeholder pensions are basic and require little maintenance. Designed for those who start late in the pensions saving game can enjoy this low cost way of saving. They work much like other purchase pensions and you deposit money into your pension to build up the fund. The managers o the stakeholder pension scheme invest the pension fund on your behalf so that the value of your pension fund is calculated on how much you have contributed and how well the fundís investments have performed.
They are ideal for those who are self employed, out of work but canít afford to pay for a pension and your employer does not offer a company pension scheme.