Pensions. For some reason, it’s something we try to avoid thinking about.
Similar to how we avoid the scales after an alcohol-fuelled, chocolate-binging Christmas. We know we should do something about it at some point…but maybe after another episode of Breaking Bad and one more biscuit.
Living for the weekend vs. Living for life after 9-5
The first time you considered your pension was probably when you got your first ever job at 18 in your Burton’s suit with tinfoil wrapped sarnies (thanks mum!) and you most likely thought you were far too young to plan for retirement. But now you’re in your thirties and you’re still done f-all about it. And retirement isn’t even that far away now. Vom.
It’s time to consider life after the 9 to 5. Your pension needs to replace your salary when you retire. Although the Government does provide a State Pension, this isn’t designed to replace your current level of earnings. If you don’t have enough squirrelled away, how will you afford that road trip with your bestie when you’re OAP’s?
Can you pay my bills? Can you pay my telephone bills? Do you pay my automo’ bills? *Gives Beyonce hair flick*
It’s never too early to plan what you can do with your pension for when you retire to make sure it lasts your whole life. The amount you’ll need really depends on the type of lifestyle you envision yourself having.
Do you still plan on regular holidays and making the most of having the freedom to go wherever you like?
Do you still have part of your mortgage to pay off?
And how about leaving an inheritance for the kids?
Even if you leave the kids to fend for themselves and plan on spending your days in front of the tele watching Corrie, you still need to have enough to cover the basics, such as food and clothing.
How to live the golden oldie dream
It is hard to predict how big your pension pot needs to be to meet your retirement needs. You may get additional State Pension and Manx Pension Supplement on top of your basic state pension depending on your circumstances, but this is often not enough for you to get by comfortably.
You need to save extra for your retirement if you can.
What’s the sitch with pensions on the Isle of Man?
The IOM Government actively supports pension savings. Earlier this month, IOM Treasury introduced a new type of pension scheme which gives full access to your pension pot at the age of 55. It allows regular saving by providing tax relief on contributions and by giving a tax-free lump sum of 40%.
An Island-wide Pension Matters campaign has been launched to educate the population on the importance of safeguarding your financial future. So many of us are still unsure as to how pensions work and how much to set aside to be able to live comfortably. For the full details, download their helpful brochure here.
The bottom line is, if you want to live out your GOLDEN years in style once you’re retired, you need to sort your bloody pension out. And sooner rather than later.
You can visit the IOM Pension Matters website here.