Self-employed? Don’t forget your pension!
If you are your own boss, it can be easy to forget about saving into a pension. Nevertheless, it is important that all your hard work leaves you with a secure and comfortable retirement, and this is where your pension will prove vital, in helping save for your future.
The number of people taking on self-employment has risen dramatically, with 4.8 million people now self-employed, (15.1% of the labour force), according to latest government figures. Yet, according to the Office for National Statistics (ONS), almost half (45%) of self-employed workers aged 35 to 54 have no private pension. Those aged 55 and over fare a bit better, with 30% of people in this age bracket having no pension savings – still a significantly higher percentage than employed workers in the same age bracket, said the ONS.
By contrast, a large proportion of employed people (over 15 million) are saving for retirement, thanks in part to auto-enrolment – a government initiative which has seen millions automatically placed into pensions schemes by their employer. There is no such scheme for the self-employed. With no employer to fall back on, they are on their own when it comes to retirement saving, resulting in millions of self-employed people facing an insecure retirement.
45 percent of self-employed workers aged between 35 and 55 have no private pension.
While some of your living costs are likely to reduce when you retire, it is easy to underestimate the amount of money you will need to live on comfortably. According to Government research, you will need between 50% to 70% of your pre-retirement salary when you finish work. While there is the State Pension, even if you are eligible to receive the current sum of just over £8,000 a year (if you have 35 qualifying years) it is unlikely to be close to what you may need.
As Douglas McCrea, Managing Director, McCrea Financial Services, says: “Being your own boss has many upsides, although unfortunately it means you need to pay more attention to your savings. Employed or self-employed, one day you will want to stop working. When that time comes, you will need another source of income – and that is where good planning comes in.”
How can we help?
There are many different savings and investments accounts you can use to save for your retirement. At McCreas we will review all your options, including everything you already have, and help you towards what will hopefully be a long, happy and comfortable retirement. When it comes to pensions, it pays to start early – the sooner you start paying in, the more tax relief you will receive from the government, and the more time your money has to potentially grow.At McCreas, we can arrange a full review of your financial affairs.
If you already have pensions plans, we can help you take a closer look at your existing arrangements to make sure you are on track.
Find out how we can help with your Pensions Planning here.
If you would like to arrange an initial free no-obligation meeting you can do so by calling us on 0141 572 1340, or via email.