Cash ER: Is now the time to start saving for your pension?

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When should you start thinking about your pension? Boring but important...

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Are you good with your money? The answer is probably yes - but only in the short term, according to new research.

A survey for the savings and investments company shows that women are good at managing their near-term finances, but when it comes to the longer-term, only a third of women (37%) plan to save something into a pension this tax year.

We spoke to Julie Russell, personal finance expert at Standard Life about how women can make our long-term savings work for us.


A pension is essential for your retirement


It makes sense for everyone to save towards their retirement, as few people will be able to manage on the state pension alone (it's about £5,000 per year). It's also tax efficient to save into a pension, because for every £40 you invest as a basic rate taxpayer, you get £10 tax relief – so that's £50 being invested instead of £40.


You should start saving for your pension in your 20s


The earlier you start to save the better because any investment growth then has a chance to grow on top of investment growth. By delaying investing, you are missing out on that potential every year.

As a rough guide, invest half your age as a percentage of your income ever year. If you start in your 20s, that would be about 10% of your income each year including the tax relief. But if you don't start until your 40s, then you should really be thinking about investing about 20% of your income each year.


Put your money into savings accounts too


Even if you can't save much, try to save something – you might find something as simple as cutting back on take away coffees can help your savings mount up. But if you don't want to lock your money away in a pension right away, start with a stocks and shares ISA which is also tax efficient.

People can find out more about being financially efficient and investments like pensions and Stocks and Shares ISAs at www.yourfuturemoney.co.uk

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