Don't Do a Hannah!
What I know now, I wish I knew then!
Here I am, 40 years old and starting my first personal pension. One that I am going to manage and invest, and watch as it grows, with the ultimate goal of a pension pot that will provide me with the ability to retire on my terms with the income I want.
As a teenager and well into my twenties I was good with money, but I always thought about the now; I never really thought much past next year's holiday.
Why didn't anyone tell me I would be 40 so quickly? Why didn't anyone tell me to join the pension scheme at work and share the importance of it with me? I stayed in my first "proper" job for nearly 10 years and I didn't sign up to the pension because I couldn't ever imagine being close to retirement. I had other things on my agenda, like a house, holidays and then children. Retirement seemed so far away… now it seems just around the corner.
With compound interest, investment growth and the tax efficiencies that come with having a pension, I kick myself frequently at my ignorance.
Was it ignorance or a lack of education?
My Family talked openly about money. We discussed the good and the bad and I was aware of how to save and spend, but nobody sat me down and talked to me about pensions. No one discussed budgeting for the future and planning my retirement, the difference putting £50 a month into my pension pot would have made was never explained. Instead, here I am, 40 years old, retirement looming and a couple of disorganised pensions from previous workplaces.
I have three children, and we all discuss financial planning. However, the conversations I have with my 20 year old daughter are obviously very different to those I have with my younger boys aged 6 and 3. What's really important though, is that we DO talk about it. To help them understand where money comes from, how we earn it, what we have to spend it on and what, as a family, we class as non-essential and or luxuries. I want them to think about their future and the importance of budgeting for later life. Perhaps I talk about it too much, especially after a recent visit from the tooth fairy Elijah, who's 6, asked if he could put his £1 in his pension. Thankfully, I talked him into buying a mars bar, but I love the fact he even knows what a pension is!
It's great that we have auto enrolment schemes, at least people are putting something away for their future, but my advice to anyone is don't become complacent, we need to plan to make sure we are saving enough so we can enjoy retirement exactly as we want to and when we want to. It's never too late to start saving, but the earlier we do, the better.
I'm speaking from experience, let me help you avoid doing a Hannah!
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.