Step 44: Personal pensions

Step 44 of the 100 steps to financial independence: Personal Pensions
Step 44: Personal Pensions

If you aren’t enrolled in a workplace pension and don’t have the option to join one, it is worth considering setting up your own personal pension. And even if you have an occupational pension, you might still want to look into personal pensions either as an alternative, or in addition to your workplace pension. Of course, you don’t have to if your workplace pension offers you exactly what you need and how much you need anyway., but as with anything it is worth considering the different options, to know for sure you have chosen the option(s) that are most relevant to you.

A personal pension works in very much the same way as a workplace pension, with the exception that your employer usually won’t be required to make a contribution. Another difference is that you need to make more decisions. Not only do you have to choose a pension provider (whereas in the case of occupational pensions your employer would have already done this for you), you often also need to choose from different packages, conditions and investment options.  Continue reading

Step 43: Workplace Pensions

Step 43 of the 100 steps mission to financial independence: Workplace pensions
Step 43: Workplace pensions

As we saw before, a workplace pension is often offered by your employer or work sector and contributions are usually made monthly directly from your paycheck. Although many of the characteristics discussed in step 42 on state pensions are also applicable to workplace pensions, the latter often have many additional advantages or characteristics, including some of the following:

Automatic

It is often (though not always!) automatic, meaning in many workplace pensions employees are automatically enrolled. If you don’t take action to opt-out you are systematically making monthly payments into your pension scheme.

Monthly contribution

You can determine your monthly contribution. There is usually both a minimum and maximum contribution you are allowed to make, and although many people might just pay the bare minimum, if you budget well and set aside enough money, you can obviously pay in more. The more you contribute (i.e. save) now, the more you’ll again have by the time you retire, not just from your monthly paymentsbut also from the compounded interest.  Continue reading

Step 42: State Pensions

Step 42 of the 100 steps mission to financial independence: State Pensions
Step 42 of the 100 steps mission: State Pensions

In the previous step we looked at the different types of pensions that exist. In this step we look at state pensions in detail, although many of the characteristics of state pensions also apply to other types of pensions. Pensions vary greatly from one country to the next, if they even exist at all, as not all countries offer state pensions, so make sure to do your homework well and read up on the details of the state pension for your country.

If you are entitled to a state pension this is normally regardless of the height of your salary and of any workplace or private pensions you might or might not have. Bear in mind that most state pensions tend to be far from generous and designed mainly to just provide for your basic needs.  Continue reading

Step 41: An Introduction to Pensions

Step 41 of the 100 steps mission to financial independence: An introduction to pensions
Step 41: An introduction to pensions

Pension… a word dreaded by many, not just because they might not like the idea of being old, or – on the contrary – are worried it’ll be way too long before they can finally retire. Many simply don’t have a clue what their pension might look like and fear that they might never be able to retire properly, due to a (nearly) empty pension pot or the absence of a decent pension plan altogether.

Or maybe you just hate the idea of talking about pensions as it sounds like the most BORING topic in the world to you.

Be that as it is, ignoring your pension is not going to do you any good and considering the many changes that pensions are going through at the moment in many countries, it is wise to learn more about them and especially to understand your own pension projection better and to put together your own pension plan. So you are going to take the bull by the horns here and set up or review your current pension scheme. It might be tough, unpleasant or tedious at first, but once the bulk of the work has been done, you can sit back with a comfortable feeling, knowing you might still be a long way away from where you want to be, or from your retirement in general, but that you’ve put in a plan to get you back on track or closer to your end goal. Continue reading