When you’re in your twenties, retirement can seem like a long way off. But the fact is that it’s the things you do when you’re young that will affect your old age. If you want to be able to live the life of a well-off pensioner you’ll need to start saving today. Unfortunately, 55% of people that came of age in the early 2000s haven’t started to save towards their retirement, and almost 65% haven’t even thought about their retirement.
Not saving could land youngsters in the same predicament that many OAPs are experiencing today – they’ve finally reached retirement age but they don’t have enough money to stop working. This means a lot of people are facing the very real prospect of working for the rest of their lives. So, if you’d like to be the exception that proves the rule, start saving in your twenties to ensure you’ve got the funds you need for your retirement.
Tackle your student debt
By the time you reach your early twenties you may already have some debts to your name. Before you can begin saving money, it makes financial sense to clear these debts from your ledger and then start afresh. In you went to university and you received tuition fee loans and maintenance loans you will need to repay them, plus the added interest. If you have only just graduated, you can use a student loans repayment calculator to find out how much you owe now, how much you’ll owe with interest rates added and how long you have to repay the loans.
As your student loan is linked to your employment, you will only begin to make automatic repayments once you start working. Those that finished their course before 2012 will make payments once their yearly salary is at or more than £15,000. Those finishing after 2012 will make repayments on salaries over £21,000. If you can afford it, make one-off payments towards your student loan as well as automatic payments deducted from your salary.
Get rid of credit card debt
Credit cards can be very useful in times of financial need, but they can also help you to dig yourself into a pit of debt. If you owe money on any credit cards, begin making monthly repayments to get yourself back into the red. You can use a snowball debt calculator to ensure you stay within your means when doing this.
Start to save
Once you’ve started to get your student loans, credit cards and any other debts that you may have under control, you should be able to begin saving. At this stage in your life there is no essential need to set up a pension plan, although if you are given the opportunity to and you believe you can afford it you should go ahead – it can’t hurt! However, putting money into an ISA or a savings account should still be your top priority. Saving money for later life when still in your twenties can seem like a useless task, but once you reach retirement age you’ll definitely be thankful to your younger self!
This article was written by Aurora Johnson on behalf of Cheselden, a continuing care review specialist.