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Many pension-related issues have been in the news in the last couple of years. These range from the raising of the retirement age, to pensioners facing the prospect of struggling financially in their old age because of inadequate pension. With the average life expectancy of British citizens increasing, finding good pension advice is more important than ever.
Even as early as in your 20s it's advisable to begin to give some thought to retirement, and to start saving even a small amount each month. First of all, there should be the aim of staying out of debt, which isn't always so easy for those who have student debt to pay off. A tax free Individual Savings Account (ISA) is a good place to start, and in your 30s you should then consider joining a pension scheme. Saving even a small amount is better than not saving anything at all.
The 40s are often a time when we are settled in our careers, and is a good time to concentrate more on personal savings. The 50s then becomes an even more crucial decade in terms of retirement planning. Pension advice should be sought in this decade if you are fearful of not having made enough provision for your old age.
A self-invested personal pension, or SIPP, is something to consider in the decade before retirement. A SIPP is a personal pension scheme, and is approved by HM Revenue & Customs. This is an alternative to a normal pension, but it is also more involved, and can cover assets.
At the age of 55, equity release opportunities will open up. This may be something to consider for those couples who are concerned that their pensions are going to be too small. Because equity release involves more than an individual or couple, the plan will need to be discussed with children, and other family members. A lump sum is paid out to equity release customers, but when a couple dies, the interest accrued has to be paid by family members, normally through the sale of the parents home.
An annuity can be a good option, but it's important to be in good health to reap the rewards, and to have enough money to invest to make it worthwhile. There are also annuities that can relate to someone's health, and these are called enhanced annuities. These annuities will result in a higher rate if you are suffering from an illness, or will have possible health issues because of your lifestyle.
Someone who invests a sum of Â£50,000 at age 60, and who lives to be 85 can expect a good return by way of an annual payout. An annuity is, however, a better option for someone who is single rather than someone who is married. If a married investor dies within a year or two of investing, then their spouse will not normally have claim to any of the money previously invested. There is also the risk of the company dealing with your annuity going bust.
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Article Added on Saturday, April 12, 2014
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