Retirement Investment Plans

Retirement Investment Plans

Investing for your retirement is even more important today when people live an average of between 80 and 90 years, longer than any previous generation. Retirement at 65 means that there are 25 to 30 years where you will no longer have an income so investing wisely is essential for your ongoing financial security.

Invest for your Future Retirement

Bonds; shares and property are all popular ways to invest capital for your retirement. One thing that financial advisers agree on is that you can never begin to invest for retirement soon enough, and the younger you are when you start the more time you’ll have to increase your initial investments and build up your capital. Choosing shares is tricky and should be approached with care and advice from a reliable and established broker. During the 1960’s and 70’s gold was a popular investment but prices appear to be tapering off somewhat and anomalies such as Gordon Brown’s famous selling off of gold reserves which made values soar are not likely to be repeated. However, there are still many good investments to be found and profitable, solid companies and commodities are generally a safe bet. It is imperative that you seek the advice of a broker – those who go it alone are far more likely to lose money in the long term. Bonds are a perennial favourite and though returns are not as high as on the stock market you have better guarantees that your investment will be safe. Property used to be considered a fail safe investment but the financial crisis of the past few years has seen a decline in trade in the property sector and a marked decrease in value in some areas. That said if you are in for the long haul, buying property is still likely to net you profits come retirement.

Pension Plans for your Future

Pension plans are the obvious investment for your future and many employers offer attractive pension schemes that you pay into automatically each month. It is worth noting however, that like any investment scheme, some are better than others and you should make certain that a pension from an employer will not penalise you in other areas. UK employees who are over 22 years of age and who earn an annual sum of over £8,105 are now being enrolled automatically into schemes by their employers. They can choose to opt out, and this is something to be aware of before you decide to go ahead. The employee and the employer must both contribute on earnings that fall within the £5,564 to £42,475 bracket, and the government encourages this type of scheme by offering tax relief incentives. On retirement you will receive a lump sum as well as a lower guaranteed sum which is paid on a regular basis, usually monthly as an income. Many pensioners now opt to invest their lump sum or more if they have access to capital. Safe investments have a lower return than other types of investment but you are guaranteed a return. These include Government Issued Securities, Certificates of Deposit, Money Market Accounts, Higher Interest Rate Bank Savings Accounts and Fixed Annuities. Before putting your money in a ‘safe’ investment plan, be aware that some allow you easier access to your capital should you have an emergency or require funds than others. For example, it is much easier to withdraw your money from Money Market Accounts or Banks Savings Accounts than it is from Fixed Annuities which are an agreed contract with an insurance company that pays you a guaranteed return. The interest is normally tax free but as they are not liquid, Fixed Annuities give you less immediate access to your initial capital. However, if you are confident that you won’t require cash at short notice, they are a good choice. A Retirement Income Fund is another option that many over 65’s prefer. You invest an agreed sum and you can choose a fund that pays more with less potential for future growth or, you can decide to waive higher income now for more growth potential in the future. There are many reputable companies who offer their own Retirement Income Fund packages and each has its own merits.

Before making any large investment or committing yourself to a pension plan or an investment package it is important to seek unbiased financial advice from a reputable broker or adviser. You can ask the Citizen’s Advice Bureau for a list of brokers and advisers who give impartial and reliable advice on investments and pension plans for a small fee.

Nigel Walters is a very talented author, he writes for many blogs and magazine’s including Emerald Knight. His interests are the stock market, the property market and investments. He writes his article’s to influence people and give them guidance.