Have you wondered what your life would be like after retirement? If you have, it is only natural. No one wants to be miserable after retirement. For many, it is the time to live their dreams – travel to exotic islands of the world, buy a yacht and sail the oceans or even start a ranch – and rightly so. Life after retirement should be fun. It should be about doing the things you love. However, it takes the mind to have such dreams but money to actualize them. Money would not be a hindrance to actualising such dreams – if you plan ahead financially. Doing that is called, having a pension.
A pension is essentially a pot of cash stashed away for your future use- freeing you of financial worries during retirement. Here are four things about a pension that you should know.
Do you really need a pension?
Well, remember we said in an earlier post that a pension is tax free? That was just to whet your appetite. Your pension is not only tax-free but you get tax relief! You get paid some amount on the money you put into a pension. The amount of tax relief you get ranges from 20% to 25%. So, you are not just the one saving up for your future, the government is too. Get yourself a pension scheme.
How much should you put in?
There is no limit as to how much you can put in. So, try to stash up as much cash as you can – and start early too. The earlier you start, the longer your money grows. So, if you have a huge post-retirement dream, stack up the cash pot!
How safe is your pension?
Very safe. The broker does not hold any of the cash. They only act as a medium for you to put your money in a fund. The money is in a bank. In the worst case scenario of the company going bust, you are guaranteed 90% of your pension back.
When can I access my pension?
You can access your pension only when you turn 55, except in some special circumstances. At this point, you can take as much as 25% of your pension tax free, while the rest is spread for the rest of your life.
Do you already have a pension plan? You are on course. If you do not, find a list of pension companies here and get one now.
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