Saving for your retirement

By Monica

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We will all need money in retirement, when we may no longer be able or want to work. Figures show that millions of people in the UK are not saving enough to be able to enjoy a comfortable retirement – or even saving at all.  

It can be daunting thinking about saving for retirement, especially if you look at the huge figures sometimes recommended to ensure a comfortable income. But it’s never too late to start saving, and even small contributions made early can grow massively over time, thanks to the compounding effects of interest and gains.

The first step is to find out how much you have now, and how much you should be saving. This depends partly on how old you are. There are several pension calculators online that can help with this, which can take into account your current income, savings, and projected state pension, and identify any shortfall.   That then provides your starting point.  

Company Pensions

The first thing to do is to take advantage of your company scheme. Your employer and the government both contribute to your pension this way, enabling higher gains. By law, every company who fits certain requirements will need to offer a pension scheme soon, so this should be open to everyone.  

Private Pensions

The situation is more difficult if you are self-employed as you will not have a company scheme to contribute to. However, there are many private pension schemes available from low-cost, self-managed SIPPS to fully managed pensions services. The variety can be confusing, so if possible, it may be worth spending upfront on some independent financial advice.

You can also utilise a private pension if you are employed, alongside your company scheme.


With historically low interest rates, traditional cash savings don’t always look terribly attractive these days. However, “saving” in pension terms does not just mean putting cash away but can also include investing and even a pension itself.   

Traditionally ISAs (Individual Savings Accounts) have been incredibly popular with savers. You can save up to a certain amount each year using these accounts. However, low interest rates and the new Personal Savings Allowance (allowing people to receive up to £1000 in interest tax-free) have hit them hard. ISAs are a tax-free wrapper, though, so still useful with regard to creating a lump sum of savings.

For better rates of interest, savers can look to regular savings accounts – but must pay in a minimum amount each month – or even some current accounts.

The government is introducing a new lifetime ISA which may be a great way for the self-employed to save for retirement, as the government will top this up substantially over a period of years, adding to capital.  However, you may not be able to withdraw savings until retirement.


ISAs can also hold stocks and shares. Traditionally the stock market has outperformed cash savings in terms of returns and growth. Savers can choose from DIY stocks and shares ISAs or managed funds – but beware of fees which can eat into growth. 

You can also invest without the ISA wrapping in individual stocks and shares. You may also need to do your own research on how and what to buy for any investing in the stock market and whether any capital gains tax will be payable on results. 

You must always be aware, too, that your money may go down as well as up. Investing is best begun at as early an age as possible so money has time to grow and to ride out stock market fluctuations.  Investments can be moved to safer havens as the time for retirement draws near. 


Recently property in the UK has been a great investment, either in terms of growth in the price of your home that allows future downsizing, or using a buy-to-let scheme. Buy-to-let has become less attractive recently due to various tax regime changes.  

Not sure how to start saving for retirement?  Where should you begin with a pension? Ask a Finance Expert a question now and get fast, accurate, specific help 24/7 – all without even leaving your house.