Millennials – you’re going to need a bigger piggy bank! So think about that pension…
First up, let’s get the ‘millennials’ tag clarified. Basically, if you are aged between 30 and 45…this is aimed at you!
If you are fortunate enough to be in this age bracket, and particularly if you are at the younger end of this bracket with no dependents, the chances are that pensions and your longer-term financial security are pretty low down your list of expenditure. According to Pensions UK, only around 50% people in this bracket have a pension.
In the Isle of Man, this figure is likely lower given that there is no statutory requirement for auto-enrolment in a pension via an employer.
And that is totally understandable! You want to enjoy the fruits of your hard-earned salary on holidays, a new car to drive, and spend on some of the things that make up the aspects of your own happiness in life.
As a trusted and regulated financial advisor we’re respected as being straight with people in terms of what they need to know, and sometimes that can be a challenge!
However, life is going to get more expensive, and you won’t be able to (even if you wanted to!) work well into your old age to give you the quality of life you want at that stage of your life.
The hard truth is that the best chance of achieving a comfortable standard of living in your later years is to invest in a pension. If you’ve already got one – perhaps via your employer – that’s great! But it might be worth looking at whether you might need to invest even further in it.
It sounds boringly predictable, but the earlier you start saving for your retirement, the more you will get at the end when you decide to step back from work.
In effect, you’re creating options for yourself in later life. Having a pension is like having your own financial safety net so that you when you do stop working, you won’t be falling too far, nor feeling the pain of that.
The cost of living will keep creeping up, but your wages may not always keep pace with this. Additionally waiting for an inheritance should not form the basis of your retirement plan. With average life expectancy in the Isle of Man around 80-84 years old, then some of you might be knocking on the door of retirement yourself!
Many pension schemes come with employer contributions, and so you should definitely take advantage if that is on offer.
The Isle of Man Government also plays its part in supporting people by offering tax relief on the contributions you make, whether that’s a personal pension, or one offered via your employer. (It’s important to note that tax relief is only offered on Isle of Man approved pensions, as determined by the Assessor of Income Tax.)
While Isle of Man legislation allows pension contributions of up to a maximum of £50,000 per tax year, tax relief is restricted to the employee’s level of relevant earnings i.e. their gross annual salary (obviously, most people only pay a reasonably small percentage of their annual salary into a pension).
Wrapping up, if you think pensions are boring, try relying on only the state pension at 67!
We can help you secure your future. And the first step? Give us a call or pop in.
It’s never too early to seek advice from an independent financial adviser, and the team of advisors at Blackford Financial Services are waiting to speak to you!
We can offer you a free initial consultation to help answer any questions you have on pensions. We have offices around the Island in Douglas, Port Erin, and Ramsey, but we can even arrange an appointment in the comfort of your own home.