Financial planning for the future is always a sensible idea, as we never know what may be just around the corner. But for many people, financial planning isn’t just about planning for the future five years down the line. Instead, they are concentrating on making provisions for their old age, at a time when the future of private pensions hangs in the balance.
Why are Private Pensions so Precarious?
It’s not that private pensions are currently a particularly risky option for people wishing to save for their retirement. But at some point, they may well become so. This is mainly because of a lack of interest over the past 10 years, which has seen private pension savings fall considerably.
A recent investigation conducted by the Telegraph has found that the number of young people thinking actively about how they will save for their retirement has increased over the past year. However it remains to be seen if this generation will be drawn to private pensions, which offer a straightforward savings scheme, or will opt in favour of a more complicated, but potentially more valuable, portfolio of different savings options.
The Risks of Retirement Saving
As with any type of financial investment, there are risks involved in saving for retirement. Even if you choose the safest, most dependable retirement savings option there is – such as a pension – you may incur high penalties if you choose to access your money before you retire.
Other forms of investment carry with them their own risks, which you should ensure that you are aware of before deciding whether or not to opt in. Bonds are no longer seen as a safe choice for pension asset allocation, due to their expense not being offset by need if you don’t intent to purchase an annuity after retirement. And any type of investment which is tied to inflation will always be subject to risk of some sort, however opting out of inflation-related investments means that you run the risk of not capitalising upon a market which goes in your favour.
The Benefits of Retirement Saving
However you choose to do it, retirement saving is always a good idea. Risks can be managed by diversifying your portfolio, and contributions can be negotiated according to how much you are able to spare. But one thing’s for certain – saving early means a better retirement income, no matter which investment option(s) you choose. High Street Wealth Management offer specialist pension advice for anyone thinking about saving for their future. So don’t delay – start saving today.