There are no short cuts

There are no short cuts to paying for retirement, so starting as soon as you can is what we all must do.

In the distant past, we used to build our own homes — all it took was the raw material, the tools, hard labour and not to mention a lot of help from family and friends. More recently, we have started paying others to build our houses for us, but that takes a great deal of money — which most of us just don’t have. To help us all out, the government of the day introduced mortgage loans, which enabled us to buy houses with little or no cash of their own. Today, the large majority of home buyers buy houses with borrowed money, with the help of a mortgage.

So, homeownership has become a simple pay-as-you-go system. You pay for the house while you live in it. Quite simple and after 25 years or more you own your home outright. Nice and simple and we all understand how it works

We pay for most things as we go

Education has also undergoing the same metamorphosis. Through most of history, education has been free — knowledge was handed down from generation to generation. However, all is changed now, and we began to pay for education, and it has become very expensive and only the wealthiest can afford to send their children to independent schools. And when it comes to university, few graduates now leave university with quite a lot of debt, primarily because of the loans that they have to take out.

Today though, most university graduates start their working life with a degree in one hand and a large student loans in the other.

Why are students and their families willing to do this? Because they regard university as a great investment in their future. The degree enables the graduate to get a higher-paying job than they otherwise would get. The higher the income during the working life, the more this can be used to offset or pay down the student debt.

By paying for university over the course of a career, student loans have now become a pay-as-you-go system as well.

But we can’t pay for retirement as we go

However, this concept simply does not work when paying for retirement — you can of course pay for a house while you are living in it, and you can pay for university while you’re working over the next 20, 30 or even 40 years, but you just cannot pay for retirement while you are inretirement. Retirement just does not work like that.

That is why retirement planning is, and must remain, a long-term plan that must start as soon as you start to earn: You just have to pay for it before you get there, just the same as when people once did with homes and their education.

Therefore, instead of saving just for a house, you must also find a way to save for your retirement. Every employer in the United Kingdom now has a legal obligation to enrol you into a workplace pension, into which they will be contributing as well as you. It is nearly always the right thing to do, to join an employer sponsored pension scheme.

Action Call

Are you concerned about your retirement plans? Not sure if you are on track for a comfortable retirement?

Contact us to today. We can review your current situation and let you know what options are available to you.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website www.miadvice.co.uk and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

Email us at financialplanning@miadvice.co.uk

It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.