There’s a lot of talk about pensions being important, and how to make the most of your finances after you retire, but you may still be unclear in exactly why you’ll need one. Here’s a brief overview of exactly why paying into a pension plan can prove essential.
Perhaps the most obvious reason why you’ll need a pension is that you will want to have a source of income once you have reached the age at which you have stopped working. Although you might be entitled to a state pension, this is unlikely to come anywhere close to matching the level of income which you were previously receiving. In the same which in which you might have already searched for the best credit card deals at sites like lovemoney.com, you will need to may sure that you look for a pension plans which will accommodate you financially once you have retired. In order to have access to sufficient funds, many people find that they will need to have been putting money into a pension plan throughout the years in which you were in employment.
Putting money into a pension plan, rather than another type of saving account, can be particularly useful because it will be largely free of tax. You may even be able to take a tax free lump sum when you come to access your pension, depending on specific tax allowances. This can be one of the most tax-efficient and effective ways of building up a solid income, which you will not be able to spend until you are retired. Many people find they actually require more money than they might realise, and so it is a good idea to begin investing in your pension plan as soon as is financially possible. Even if you have managed to pay off your mortgage, it is worth bearing in mind that, these days, many people are living much longer, and the cost of living is continuing to increase.