Why you need a pension

Men: you're looking at an average retirement of 16 years if you work until you're 65.

Women: you can look forward to around 26 years if you retire at 60.

These are last year's statistics and as we're living longer all the time, those figures will almost certainly be higher once you reach retirement!

The State only helps if you're happy to live on £95 a week or so. That's the basic state pension without means testing. It's not much, is it?

If you want to be warm, well fed and need a reasonable income then a pension is normally the best way of saving for retirement.

You get major tax benefits and can enjoy the magic of compound interest.

Let's put it this way. Say you're 65 Today and had started saving £50 a month when you were 20. If you'd put it under the mattress you'd now have £27,000.

But if you'd put it in a pension and it had grown at 7% pa (the average stock market growth for the past 80 years has been 8%) it could now be worth a whopping £190,000...(OK, this doesn't include costs and charges but demonstrates the effect of compound interest). Besides, putting money under the mattress will make your sleep very lumpy.

But don't delay with your pension moves.

The younger you start the better. It'll be much cheaper for you and you should end up with a lot more money. Every month you wait can make a significant difference to your future wealth (see the cost of delaying and / or savings calculator).

If you move now, you'll have a good chance of a comfortabl pension.

But if you delay, or end up doing nothing, maybe you’ll end up in misery without enough heating and be one of those sad old people who have to hang out in a shopping mall to stay warm.

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So, how do I get one.

The new Stakeholder pension is a simple, cheap and flexible type of pension which was designed to improve things for the public. It is probably the best buy for most people outside any pension plan offered by your employer.

You can do this yourself . But it’s better to go to an IFA and insist on a stakeholder – some will offer more expensive options which have no real benefit for 99.9% of people. A good IFA will know about the histories of pension providers and can use their experience to steer you away from poor performers.

What you must not do is to delay taking action see the cost of delaying

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