To be perfectly honest with you, I’ve spent quite a few years trying to get my pensions in order and I’m sick to death of it! I’m no financial adviser, by any means, but I have learnt an awful lot over the past 12 months and rather than keep it all to myself, I thought I’d share the biggest myths I stumbled across.
- I have to invest loads for it to be worthwhile – Well of course that would help, but there are 2 other factors that will be working for you. Time and investment returns. The longer you are investing for, the better. Make sure that you have the best possible performing investments, this is really important.
- My pension will be lost if I die before I retire – Again not true. You can nominate your pension to go to whomever you want, should you die young. Even though you will not benefit, someone in your family will. The pension company does not keep your money.
- I have to take my pension all in one go – Not so. You can phase taking money out of your pension, taking what you need and when you need it. This is ideal if you plan go from full time to part time working before you retire.
- I can’t start a pension until I am 22 – Absolutely not true. You can start a pension before you leave high school, even before you have any form of income. If you are fortunate to have generous parent or grandparents, up to £3,600 a year can be invested into a pension even if you are younger than 16 and not working.
- I have to buy one of those annuity things when I retire – Not true. You can, of course, if that’s what works for you. But you can also draw down on your pension when you retire choosing how much money that you need and how often.
- The state will look after me – Not anytime soon they won’t. As much as this sounds a great idea, we simply cannot afford to do this, which is why the State Pension provides a basic level of income at best.
- Once I start a pension, I can’t stop¬ – Not true. If you really have to, you can stop investing if you fall upon hard times. If you do need to stop, the sooner you can restart paying in again, the better.
- My property is my pension – Well it might be, but the chances are it isn’t. We all need to live somewhere and not many of us really like the idea of downsizing our lives so much so that we have enough money to fund retirement.
- I don’t earn enough to save into a pension – The old adage goes, “if you can’t afford to, you can’t afford not to”. To put it simply, regardless of how low your income is, it is crucial to get into the habit of saving, even if it isn’t a great deal. Learn the habit of saving early and stick with it.
- If my employer goes “bust” I’ll lose my pension ¬– Again not true.Your pension fund belongs to you and your employer cannot take that away from you under any circumstances. It is yours and yours forever.
People have told me so many myths about pensions. Hopefully, my guide will clear up most of them. Planning for your retirement can be quite a daunting task, so having the right information is very important. If you need any further help with your finances, I recommend this financial adviser in Leeds, who helped me tremendously, a real good guy!