My Debt Diary is a place for me to share my debt free journey. I update you every two weeks on my progress and share tips and advice as I build my own financial knowledge along the way. It is very much about what is happening now and in the short term. But what about the long term? I am very focused on my mission to pay off all of my debt, however I have to think about the future too. Here is my plan for retirement while I pay off my debt.
My savings amount will be progressive and will grow once I am debt free. Of course as I am currently focusing all of my money into my debt payments right now, it can be hard to find the funds to put away into savings at the same time. None the less, the sooner I have my plan for retirement in place the better.
My plan for retirement
The first thing that we tend to think of when it comes to saving for our later years is of course a pension. As I am self-employed my pension is not something that is set up for me automatically. Once I began making some money through my freelancing work I knew it was time to see what my options were.
For some people, looking for a pension will mean studying all of the numbers and percentages on offer in detail, looking through every provider available. For me, it meant asking for some recommendations and choosing the provider that scared me least. Some financial advisers might shake their head if they read this. You should go for the best rates I’m sure, but we all need to take our own approach.
What I really wanted was a platform that allowed me to pay in easily and keep track of my total. Knowing that I would want to increase my contribution amount as my debt total went down, the thought of having to make phone calls and apply for changes with forms and things was just not on. I need to be able to click a few buttons and know exactly what’s going on.
I currently pay £25 each month into a private pension with Nest. (I’m not affiliated with them, but so far so good). This is of course a very small amount, but it is adding up quickly. Since I started earlier this year, it has built up to £229. If I continue with this, it will grow to give me £1500 per year when I retire. That wouldn’t buy me very much of course, but that’s not the point.
The important thing is that I’ve started and now the compound effect can begin to work. I plan to increase my pension contribution to £150 per month once my debt is paid off. Whilst there are many ways to save and invest money for the future, setting up a pension was a priority for me. I will put other things in place once I am debt free, but I wanted to have a pension in place for my own peace of mind.
Do you have a plan for retirement? What have you got in place?
Victoria of lyliarose.com has written a great post about why you shouldn’t rely on a state pension and I definitely recommend you have a read!