In the 2016 budget the UK Government announced the introduction of the Lifetime ISA, a scheme through which 18-40 year olds can invest up to £4,000 per year until the age of 50, at which point the Government would add a 25% bonus to the total funds deposited. The Lifetime ISA would be accessed tax-free at the age of 60, before that point any access would result in the loss of the Government’s bonus and interest.
This move reflects the growing importance placed upon younger generations to start saving early into their working careers. With state pensions and privileges being squeezed, the next generation to embark on the employment ladder are being offered a range of incentives, including the lifetime ISA, to encourage them to start saving from their pay packets today.
With the state pension age set to rise to 66 in 2020, and the reality that it is becoming less and less likely that the state pension alone will be able to support your retirement, it is essential for people to assess the range of savings options available to ensure a supportive income is achieved for their retirement. In the UK the pensions auto-enrollment scheme is in effect, however you can opt-out of this scheme at the loss of the employer’s contributions to your pension pot.
If you live abroad or have the confidence to make your own investment decisions, you can enroll in Self Investment Pension Plans (SIPPs), where you can invest into a wider range of investment areas, as well though it can be beneficial to seek the investment advice from a qualified financial adviser. Speaking to an experienced adviser can help you create a personalised investment plan, one that is tailored to your personal needs and risk appetite.
A simplistic method to start saving is to simply siphon off a fixed portion of your monthly income, and set it aside either in an ISA or to build up a nest-egg with which you can start investing. In doing this you create a guaranteed savings pot before your daily expenses and are able to build a more substantial level of capital in order to invest more diversely and productively to grow your retirement income.
Whatever course of action you take, seeking the advice of a qualified financial adviser is extremely beneficial as it can provide you with a personalised, tailored and responsible course of action.
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