There's no time like the present to save for the future

Joining a pension scheme is the first step to a comfortable retirement - and the earlier you do it, the better

Ask a friend, a colleague or a family member how they plan to fund their retirement, and it's possible their reply will include mentions of pensions, property and other investments.

More and more people are deciding not to put all their eggs in one basket in accumulating funds for their later years, according to new research from Barclays Wealth. However, disturbing findings in the same report show that one in five people are relying on cash savings accounts alone.

That is likely to prove a costly mistake, warns Philippa Gee from the independent financial adviser (IFA) Torquil Clark. "Cash and other investments still have their part to play in retirement planning," she says. "But they are much more likely to be short-term investments, which you may use from time to time - and therefore give no assurance as to the eventual retirement income."

As a first step towards securing a comfortable retirement, she recommends joining your employer's pension scheme.

"Many people haven't even done this - simply because it all seems too technical and nightmarish to cope with," she says, adding that it is particularly important to take action if the company also makes a contribution." Miss the opportunity, she adds, and "it is tantamount to throwing money away".

If you don't pay into a pension fund - whether a company or a personal scheme - bear in mind that you will be also missing out on valuable tax relief. For every £78 you contribute as a basic-rate taxpayer, the Government pays in an extra £22. Higher-rate taxpayers do even better: for every £60 they pay in, the taxman tops up their fund with £40.

Many of us are guilty of taking a head-in-the-sand approach to pensions. Inability to afford the payments is the most common excuse, followed by reasons such as "I haven't got around to it" or "I'm too young".

"People still see saving for their retirement as a low financial priority as they struggle to balance setting aside a reasonable amount for the future with the financial demands of everyday living," says Stephen Ingledew at Barclays Wealth.

But as the table below illustrates, delaying starting a pension by even a few years can end up costing you dearly - particularly in the case of women, who should save more than men because they have a longer life expectancy.

Martin Bamford from IFA Informed Choice says it's never too late to start making provision for retirement. But he adds: "The earlier you start saving, the easier it becomes to build a substantial pot of money."

He suggests savers consider a range of retirement plans, including an individual savings account (ISA) - but warns that this type of savings vehicle requires more discipline than a pension because you can get your hands on the money at any time.

The Barclays Wealth report also shows that as house prices climb steadily, more than a third of people are relying on bricks and mortar as a means of saving for their retirement.

"Property is very popular," says Donna Bradshaw from IFA IFG Group. "But if interest rates go up, or if prices drop, some investors could find themselves in serious financial difficulty."

The secret of retirement planning, she adds, is to diversify.

How the specialists are saving towards their retirement

The Independent on Sunday asked three independent financial advisers about their own financial planning.

Philippa Gee, Torquil Clark

Ms Gee has significantly increased her pension contributions this year. She says: "Despite the inflexibility of a pension, the tax relief and disciplined savings approach are an important part of my planning.

"I also have property and direct equity investments."

Martin Bamford, Informed Choice

"I'm using a personal pension," says Mr Bamford, "but plan to move the money across to a self-invested personal pension [Sipp], where I can invest more actively in a wider range of assets.

"My pension fund contains a well-diversified spread of investments. I'm fairly aggressive when it comes to investment risk so there is a high proportion of equities, but I haven't neglected some exposure to property and fixed-interest funds as well."

Donna Bradshaw, IFG Group

"With the benefit of hindsight, I could have contributed more to my pension plans and ISAs," says Ms Bradshaw, "but other areas [of my planning] had priority at certain times - such as a year travelling in my thirties.

"I'm neither a natural saver nor an over-spender and would rather keep working than retire."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
David Beckham
peopleFootballer joins No campaign
Sport
Angel Di Maria
Football
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
news
News
i100Exclusive interview with the British analyst who helped expose Bashar al-Assad's use of Sarin gas
PROMOTED VIDEO
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game
film
Arts and Entertainment
Rob James-Collier, who plays under-butler Thomas Barrow, admitted to suffering sleepless nights over the Series 5 script
tv'Thomas comes right up to the abyss', says the actor
News
newsIn short, yes
Sport
Angel Di Maria celebrates his first goal for Manchester United against QPR
Football4-0 victory is team's first win under new manager Louis van Gaal
News
Denny Miller in 1959 remake of Tarzan, the Ape Man
people
Arts and Entertainment
Cheryl despairs during the arena auditions
tvX Factor review: Drama as Cheryl and Simon spar over girl band

Arts and Entertainment
art
Arts and Entertainment
Calvin Harris claimed the top spot in this week's single charts
music
Sport
BoxingVideo: The incident happened in the very same ring as Tyson-Holyfield II 17 years ago
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

    £280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Senior BA - Insurance **URGENT**

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Training Coordinator / Resource Planner - City, London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

    Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

    £400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

    Day In a Page

    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week
    The fall of Rome? Cash-strapped Italy accused of selling its soul to the highest bidder

    The fall of Rome?

    Italy's fears that corporate-sponsored restoration projects will lead to the Disneyfication of its cultural heritage
    Glasgow girl made good

    Glasgow girl made good

    Kelly Macdonald was a waitress when she made Trainspotting. Now she’s taking Manhattan
    Sequins ahoy as Strictly Come Dancing takes to the floor once more

    Sequins ahoy as Strictly takes to the floor once more

    Judy Murray, Frankie Bridge and co paired with dance partners
    Wearable trainers and other sporty looks

    Wearable trainers and other sporty looks

    Alexander Wang pumps it up at New York Fashion Week
    The landscape of my imagination

    The landscape of my imagination

    Author Kate Mosse on the place that taught her to tell stories