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Got your first job? It's time to think about retiring

Experts believe we should begin saving for retirement as soon as possible.

When you’re starting out on your career it can be daunting to think about the time it will come to an end. Even those who are well in to their working lives have trouble visualising retirement and, as a result, fail to prepare for it.

"So many people are scared of pensions, they’re scared of thinking about their retirement so they just do nothing," said money coach Eileen Adamson on new podcast, Clever about Cash. "That is just the worst thing to do."

(Image Josh Appel/Unsplash)

The Clever about Cash team has answered some common questions about pensions for those new to the workforce and those who have been putting it off.

Have I left it too late?

Eileen believes that even if you've been turning a blind eye to your pension there is still time to act.

"Go on to the Pensions Advisory Service ... and educate yourself at a basic level about pensions. Then go to Money Advice Service, they have got a brilliant pension calculator and from there it can tell you what income you will need in retirement."

How much of my monthly salary should I put into my pension?

Speaking on the podcast, financial adviser Phil Anderson explained, "You want to save what’s affordable. There’s a really good Warren Buffett quote: 'Do not save what is left after spending, but spend what is left after saving'."

Eileen said, "The basic idea is to pay a little amount in from early doors. The longer you wait, the more you’ve got to pay in.

"Depending on your age now, if you were a couple aiming for a comfortable lifestyle, if you started saving at 20 you would need to pay in £213 a month. But if you waited until you were 50 you would have to pay in £647 a month."

Should I join my employer's pension scheme?

Actuary Kevin Hollister advised that it is worth joining an employer's scheme if the employer is also making contributions.

"For instance, [you] may pay in 5 or 6% [of your salary] and the employer may make a contribution of either 5 or 6% or even higher than that," he said. "By not joining you are giving up that contribution that the employer pays."

Can't I just rely on the state pension?

The future viability of the state pension is a hot topic. Currently, the pension age is 65 for both men and women. By 2028 it will climb to 67.

"But it’s also proposed to rise to 68," said Eileen. "If you are born after April 1978 then it will be your 68th birthday before you get your pension.

"The best advice is that people can’t rely on their state pension. I think people should be thinking of it as being a bonus and looking at other ways of providing for themselves in retirement."

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