Self Employed? Start saving for retirement...

Why the self-employed should save NOW for their retirement

Thursday 31 October, 2019

Our Financial Adviser for North London, Cheshunt, Waltham Abbey and Hertford, Tracy Dove explains why retirement planning is a key component in the financial planning process and how the self-employed should save for their retirement. 

It is never too early to start saving for an enjoyable retirement. Every person is different and has their own individual approach, but Thomas Oliver’s financial advisers recommend saving for the long-term to achieve your retirement goals. If you require pension advice call our financial planning team now on 01707 872000.

What is Retirement Planning?

Retirement planning could involve spending income from stocks and shares, properties, art and collectables and pensions. The main approach for most people is to use pensions and the ability to diversify your pension pot into different funds is a key component which appeals to the vast majority. 

How should you save for your retirement? 

Individual pensions and the availability of workplace pensions for employees has made people more aware of the need to save for retirement and will hopefully alleviate the burden on the state pension regime, which already struggles to provide an individual with enough income to have an adequate standard of living. As a result, many young people have already started saving into a workplace pension and they should reap the rewards of extra contributions from their employer as well as tax relief from the government. 

Self-Employed individuals should save for their retirement

However, the main problem is the self-employed consumer, as there is no workplace pension scheme available for these individuals, so unless they plan themselves and save for their retirement, they may have to work longer due to a shortfall in income at retirement. The irony of this is that according to recent figures released by Pension Provider Nest, 74% of self-employed workers think it is important to save for retirement but 50% are unsure how to do it. 

The self-employed represent a big gap in an otherwise improving pension landscape and although the government has talked about looking at ways to assist the self-employed with saving for retirement, it is better to act now rather than wait on legislation changes. This is where a financial advisor could prove important to anyone who is self-employed. 

How can a financial adviser help a self-employed individual save for their retirement?

Tracy Dove Financial Planner in North London, Cheshunt, Waltham Abbey, Basildon, Hertford & Hertfordshire said:

‘The first step when dealing with my self-employed clients is to look at any pensions they are entitled to if they worked for previous employers. This is because the client may have a bigger pension pot than he or she realises as it would have grown since it was originally invested. As a result, we can include this in our financial planning analysis when we consider how much more savings the client needs to contribute to obtain their intended retirement income. We can consider whether it is worth transferring any existing pension schemes, provided it is viable, so it coincides with your new contributions. Then you would have all your pension income in one place and can invest appropriately. However, please note it is often best not to move your pension schemes and we will analyse everything including any existing benefits you may have with your old scheme before we make any recommendation.’

Start retirement planning early so you save for the long-term and achieve your retirement goals

Tracy Dove Financial Adviser in North London, Cheshunt, Laindon, Waltham Abbey, Hertford & Hertfordshire continued:

‘Overall it is imperative to start retirement planning as early as possible because good routines of saving any spare income will benefit you in the future if you can save over the long-term (more than five years). It is even more vital for the self-employed to seek financial advice as early as possible because there is no workplace pension scheme available for them. We often meet self-employed clients who are over 50 years old without any sustainable retirement income. Remember being self-employed is hard enough and you do get tax relief on pension contributions, so not only will you be able to save for retirement, the government will give you tax relief to invest too. This is why the Thomas Oliver financial planning team will work with anyone who is self-employed to make sure that you are in a good position now and can plan and save for your future retirement. I often work with accountants so that together we can save for your retirement tax efficiently. If you want to review your tax planning and potentially reduce the tax you pay but retire on a comfortable income, please contact us for your free initial pension consultation. Call our Goff’s Oak Head Office on 01707 872000 for more information.’ 

The value of your investments can go down as well as up, so you could get back less than you invested. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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