Wednesday, July 13, 2011

Budgeting for Your Pension

This is a guest post by our friends over at www.debtadvisorycentre.co.uk, I recommend you visit their website for solutions to your financial problems.

Saving for your retirement is an important thing to think about for the future. The basic State Pension for a single person currently stands at £102.15 per week, which you may qualify for when you reach retirement age.

If you want to have more than that when you retire, it's important you start putting money aside as soon as possible - if you haven't done so already - which may mean making changes to your monthly budget.

As with any kind of saving, putting money aside for your retirement can be a lot easier if you increase your disposable income every month: that is, the amount of money you have left over after you've covered your essential expenses (such as mortgage/rent payments, utility bills, etc.).

Your disposable income is what you have left to repay your unsecured debts and, if there is any left over every month, to spend on non-essential 'luxuries' - or save for the future.

If you'd like to save more for the future, you could try to maximise your disposable income by cutting back on non-essential spending and/or increasing your total income (all the money your household earns/receives).

How could I maximise my disposable income?

There are two main ways of increasing your disposable income every month:

  1. Increase your income. Check that you're receiving all the benefits you're entitled to, or look into working extra hours if it's reasonable to do so. Some people decide to take in a lodger and charge for rent/bills, for example, which could considerably raise your income every month.
  2. Reduce your expenditure. Find out if you're entitled to any tax reductions/exemptions, or if you could switch to a cheaper utility supplier to save on your monthly gas and electricity bills. You may decide to cut back on your main yearly holiday or other luxuries you feel you could live without for the time being.

However, if you're also repaying unsecured debts every month, trying to save up for retirement isn't always easy, as some of your disposable income will go towards covering your repayments every month. How could you budget for this while still keeping on top of your debts?

Saving and repaying debt

When saving for the future, it's important to make sure you can still afford your repayments every month to your unsecured lenders. The sooner you can pay your debts off in full, the more money you'll have every month for savings.

This could mean a change in the way you manage your debts, or, if you already have savings, it may actually be worth using part of them to repay your existing unsecured debts first, then starting to save more for your retirement after you've paid them off.

If you can't afford to save anything at all because of your unsecured debts, you might want to get some professional advice - at www.debtadvisorycentre.co.uk, for example - to find the best approach for your circumstances.  

1 comment:

  1. What's a pension? Isn't that something only government workers get?

    ReplyDelete

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