Lovewell Blake: Is it too early/late to start investing in a pension?For some, retirement might feel miles off, but the sooner you can start saving for it, the better.15th Apr 2021
By way of a process known as ‘compound interest’, any return you make on your investments builds your capital and gives you a larger base to grow in the future. This can have a dramatic result on your savings over the long-term. If you delay your pension, you may have to make up ground at a later date. Moreover, by saving inside a pension, you will benefit from the tax-relief available. For a basic rate taxpayer, you can see an immediate boost of £20.00, on a net contribution of £80.00.
Higher and additional rate taxpayers, can also claim further amounts through a tax return.
Now, if we were setting up a market stall and we offered you £100.00, in exchange for £80.00, we would have a lengthy queue of takers. The same premise is applied to your pension savings.
Conversely, it is never too late to start a pension. This is one of the biggest myths in financial planning. The tax-relief alone is usually enough of an incentive to make a pension contribution worthwhile.
Are you retired? If you have not yet reached age 75, then you could be missing out on £720.00 in tax-relief, with a gross (annual) contribution of £3,600 (£2,880 net).
It is worth noting that you cannot access your pension benefits until you turn 55, under current legislation. This is increasing to age 57 in April 2028.
If you have any specific questions or would like to speak to a member of the Lovewell Blake team, get in touch via email firstname.lastname@example.org