It is an unfortunate fact of life, but many people have no pension savings and will be living solely on state funds once they stop working. A recent survey found that 15 million people in the UK have no pension savings at all. That’s nearly a third of adults. The introduction of Auto-enrolment in 2012 now means that there are many more people saving into pensions than previously, but the study by the Financial Conduct Authority (FCA) also found that only 16% of people have a substantial final salary pension.

There are many reasons why this might have happened. Sometimes due to simple procrastination, a lack of financial discipline in our younger years, or simply a sense that we’re not earning enough to save for something that seems a long way off.  Time catches up with us all so  even if you are now in your 40s or 50s and haven’t yet started paying into a retirement plan, all is not lost. At Holborn Assets we would argue that it’s never too late to start.

Statistics show that most people working in the UK are at the very peak of their earning power in their late 30s and early 40s, but it is  also a time when outgoings are also often at their highest, with everything from childcare costs to mortgage repayments taking their toll. So, how should you approach planning for retirement in your 40s or 50s?

  1. Start budgeting now

Get into the savings habit again. When you have high outgoings as mentioned above, it might seem impossible to start with but there will invariably be areas where you can save. Keeping a note of everything you spend for a few months will show you where the money is going and give ideas on where to cut back. Even switching supermarkets can lead to substantial savings, as can using voucher deals for meals out.

  1. Review your UK State Pension entitlement

Anyone who has worked for 10 or more years in the UK will have some entitlement to the basic state pension but you need to have paid in for 35 years to receive the full amount. This is currently £159.55 per week, equivalent to £8,296. And if you are part of a couple and you both receive that maximum, that is £16,592 each year, indexed in payment. This will not be enough on its own but can make a significant difference to your standard of living in retirement.

Anyone who is not currently resident in the UK can choose to make voluntary National Insurance contributions to increase their years of entitlement and can also backdate payments by a few years if there is a substantial shortfall.

  1. Check any ‘forgotten’ pensions

Many people will have been part of a pension scheme run by an employer and we regularly come across cases where people have all but forgotten a plan, or where they have assumed it is worth nothing but on checking find that it is worth a significant amount. After all, something is better than nothing so it is worth digging around and getting in touch with old employers and following up with insurance companies.

Once you have details we can review plans for you.

  1. Start investing now

The longer you leave it the harder it will be to build up enough funds for your retirement. Even if you are in your mid 50s, you still have 10 years to save and invest, and compounded annual growth can make a real difference. Even saving a relatively small amount to start with will make a difference over time.

  1. Invest wisely

We do not believe in a one-size-fits-all solution but will work with you to agree the best way for you to plan for your financial future, whether this is by investing on a regular monthly basis, or by making lump sum payments, perhaps from commission or bonus payments. In each case we will ensure you invest with a level of risk that means you can sleep easily.

Ongoing management and advise is crucial to achieving optimum returns and that is all part of our professional service.

Keren Bobker, Senior Partner.