Planning financially for retirement is essential but, for some, just relying on your state pension or paying into a private pension doesn’t seem enough. Whilst pensions have large tax benefits, many are seeking other additional solutions to finance life after giving up work. We reveal some alternative ways to save for retirement.
Stocks and Shares ISA
Stocks and Shares ISAs are usually a fund used towards shares, property, or bond investments. Like pensions, ISAs allow you to save tax free. For the 2018/19 tax year, you could save or invest up to £20,000 into a one or more ISA accounts.
At Wellesley, we offer an ISA eligible Property Bond. Money you invest into our Property Bond is used to acquire loans made by Wellesley which are secured against UK residential properties. Being ISA eligible, this means you could hold your Property Bond within an ISA, allowing you to earn tax efficient fixed returns of 5.50% per annum.
Some key features of our Property Bond include:
- Property backed loans
- Loans are only ever lent to experience property developers
- 3 Year Bond
- Minimum invest of £1,000
- Listed on the Irish Stock Exchange
- This means you have the opportunity to list your Bond should you require access to your funds
- Administration and custody services provided by the share centre
Company SAYE schemes
Many large companies offer their employees SAYE (Save as Your Earn) or ‘Sharesave’ schemes. Employees can buy shares in the company with their savings for a fixed price. You can save between £5 and £2500 per month for three or five years. Employees who complete the length of the savings plan receive a tax-free bonus on top.
The People’s Pension
If you are working for a company and they have one to 10,000 employees, it is law that they enrol you on The People’s Pension. You have the option to opt out but having multiple pension sources is allowed. Each pay period you will automatically pay a small amount into your People’s Pension, along with a contribution from your employer.
Often, people find that the return on their savings with The People’s Pension is better than any savings account they hold with a bank.
Investing in property
One approach households take is constantly moving up the property ladder throughout time. Moving from a starter home to various family homes means that downsizing upon retirement will leave you with a lump sum to live off. This means you will need to have paid off your mortgage when you come to sell to receive the maximum.
Another avenue some are harnessing in their 40s and 50s is creating a portfolio of buy to let properties. Letting out homes and becoming a landlord is a way of generating income during retirement and you can be as hands-on or off as you please.
The current state pension age in the UK is 63 for men and 65 for women. However, you do not have to retire when you reach this age. Many people choose to continue working, whether this is in their current role or taking a part time job to supplement their state pension.
What is the best pension for me?
It is worth remembering that everyone will receive a state pension when they reach the qualifying age. However, with this amounting to £164.35 per week, there is motive to save or invest in multiple methods to ensure your retirement is financially comfortable.
Whilst there is a greater emphasis on contributing to a pension from an early age to build your pot overtime to give you a better income, it is never too late to start saving for the future. If you begin contributing to your pension in later life, you can still add the equivalent of your annual salary in to your pension fund tax free each year.
If you are unsure of the best avenue for your future it is best to seek the advice of a pensions expert.