How you should be saving for retirement in your 20s, 30s, 40s, and 50s

We know, we know: you don’t want to talk about the P word.

Saving for your pension isn’t exactly the most fun, glamorous topic around, and few of us are particularly keen to think about the inevitability of ageing and thus retirement.

But actions you take now could help set you up for the future.

What exactly should you be doing, though, right now and in a few years time?

We asked experts for their recommendations, guiding us through the financial steps we should take in each decade to protect our retirement years.

Ready? Let’s get into it.

In your 20s, get your income protected

David Vanek, founder and CEO of Anorak, tells ‘For many in their early twenties, balancing their only income with a social life, bills, home buying, projects, and initial retirement plans can be a struggle, and savings and insurance products might be the last thing on their minds.

‘But as the last two years have shown us, the unexpected can come out of nowhere and have a huge impact on our finances if they aren’t properly protected.’

That’s a valid point. We don’t want to end up in a situation where we’re unwell, unable to work, and financially screwed.

So what can we do?

‘Knowing where to start with protecting your finances can feel overwhelming, but it doesn’t have to be,’ David says. ‘There are some fantastic plans out there that can protect your income and ensure you still achieve your goals or simply cover things like your rent and weekly food shop even if you become ill.

‘Income Protection, for example, pays a monthly amount if you can’t work for any medical reason. It replaces part of your missing income, so you can always cover the essentials and can be taken out relatively quickly.

‘It is the smartest thing a working adult in his 20s can do in these uncertain times for our health, as the protection is more sufficient and long term than dismal statutory sick pay. It allows you to continue hoping for an early, comfortable retirement, as well as hitting personal milestones without risking the money you’ve worked hard to save.’

These sorts of insurance products can be a bit baffling when you first look into them – don’t be put off.

Dedicate some time to really looking through policies and finding the best one for you – and don’t be afraid to ask an expert or an older pal for some guidance.

Anorak’s guide to the best income protection companies is worth checking out too.

In your 30s, look into your mortgage

Your 20s were a time for renting. Post-30, it’s all about owning (if you can).

Richard Dana, co-founder and CEO of Tembo, adds another challenge to getting on to the property ladder – could you pay off your mortgage earlier than planned? And what about remortgaging to avoid higher rates?

‘Getting on the property ladder has proven to be a very effective way to accumulate wealth,’ he tells us. ‘Over the past 20 years, a homeowner would be £190,000 better off owning than renting the same property. So, when it comes to homeownership, the sooner the better in terms of your future wealth.

‘For most people, buying a home will likely drain their savings accounts, but now with more options than ever to increase deposit size and affordability, including a growing range of family boost mortgages – where your family can help increase your deposit – buying a home is more affordable than ever.

‘There are also several private Help to Buy schemes if you do not have family support.

‘Once you’ve bought a home, it is important that you look to remortgage onto a new deal as soon as your initial fixed term ends – otherwise you risk going onto your lender’s standard variable rate (SVR), which is typically much higher.

‘Saving on a few percentage points might not seem like much, but over a five-year term, it can add up to tens of thousands.’

In your 40s, do an audit of your money habits

Jonathan Corner, co-founder of ilumoni, advises: ‘Your 40s are crucial for financial planning, and setting appropriate goals now will mean starting your 50s stronger as you look towards retirement, particularly if you’ve more debt than you’re comfortable with.

‘While wages might be better than ever, disposable income is often squeezed by dependents.

‘Research from ilumoni found those with two or more children at home were five times more likely to typically just pay minimum payments on debt (43% vs 8%). Plus, two in five (39%) 35-44 year olds regularly feel overwhelmed making calculations about borrowing vs one in four 45-54 year olds (23%).

‘Repayment inefficiencies cost dearly, both in time to repay and cost of debt.

‘Review your repayment habits, for example fixing payments or using the avalanche method, or even restructuring debt to lower interest products.

‘Consider using apps like ilumoni to do the hard work, leaving you with less ‘’life admin’ and more time to enjoy life.’

In your 50s, sort out life insurance

Congrats, you reached your 50s with a decent pension pot. Alas, that doesn’t mean you’re free of any stress.

‘Although this contribution is clearly crucial, if you are planning on having a stressless life after you stop working, you should factor in other areas that will need covering,’ says David. ‘Simply put, you do need to ensure life insurance – and you should do this as soon as possible.

‘With growing children, teens, ageing parents and debts that need to be cared for, few things give peace of mind like knowing that loved ones will be in a good place should the worst happen to you.

‘While this is still years away, you must be aware that having a pension will not give you this comfort, as its benefits after you die depend on the type of scheme, your age or how much money you cashed out.

‘So do your future, retired self a favour and take a tailored life insurance plan that covers what’s most important to you.

‘Saving for a well-deserved retirement also means planning out for your partner or children in case they have to pay off debt, bills, expenses or funeral costs without having to compromise their lifestyles.

‘Unlike your pension plan, this will only activate after passing, and independent online brokers have never made it more simple and convenient to get expert advice and buy this online. In fact, depending on your circumstances, it can be very affordable.’


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