Are you working towards being financially secure?

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To some, retirement may seem like a long way off; another lifetime almost. It is tempting to live for today and leave the future to sort itself out. As a twenty something year old, paying into a pension did not appeal to me at all. Retirement seemed so far away in the distance and quite frankly I desired to live for the short term; holidays, clothes, eating out. I am thankful to my mother for instilling the importance of paying into a pension from a young age. 

One may think along the lines of “I will live one way or another”. The question I have is how will you live? Will you be comfortable after retirement or will you be living on the bread line? It is no fun as an elderly person deciding whether to buy food or heat your home. This is the circumstance in which many elderly people in the UK live in. Those who were not employed on a permanent basis or did not prepare for their future are existing on a meagre state pension.

If you take out a pension with your organisation, your employer will contribute a percentage.  Yes, you will forfeit a portion of your monthly income but the benefit of this far outweighs the reduction.  

If you are self employed you can set up your own “nest egg” with a bank or other financial institution.  Do thorough research before making a decision. Identify which plan will work best for you and your family.

The saying below has always stuck with me: 

“You reap what you sow.” 

We are often required to sacrifice now in order to gain later.  This will mean thinking beyond tomorrow, next month and even next year. It will mean planning for your future; that in the event of life changing circumstances, your home and livelihood will be taken care of. 

Do you have plans in place for your future?

What or who encouraged you to take action? 

What advice would you give to a young adult today who is reluctant to take up a pension plan/save for the long term?

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22 thoughts on “Are you working towards being financially secure?”

  1. I can see why someone might not save if the government pursues an inflationary monetary policy that penalizes savers at the expense of speculators. Still, it is better to save than to not save.

    I have a couple of pieces of advice for would-be savers:
    (1) Comparison shop for the best interest rate – consider putting your money with a building society rather than with a bank, for example.
    (2) Don’t just save: invest some money in a reputable, no-load mutual fund.

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  2. Phoenicia, I had a brother-in-law who was diagnosed with Type 1 Diabetes in his early twenties. This meant he was ineligible for life insurance. Instead, smart man that he was, he put aside $20.00 out of each paycheck from that time until he retired. When he died he left his widow without any financial worries. $20.00 doesn’t sound like much but over a lifetime it really adds up. So starting early is only smart.

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  3. My husband and I met at work in 2002. We had a good 401(k) plan and he was the champion of getting people enrolled in it. The holdouts were usually the 20-somethings. He’d sit down with them one after another and show them what would happen if they invested in the plan. It worked. We had almost 100% employee participation. (PS. 401s are for all employees, not just high paid ones. That’s a very simplistic statement because I’m not a financial person.)

    I have always saved, even when I didn’t earn very much money. My parents taught us the value of saving from when we were children. I’m SO thankful for those lessons.

    As Jeannette said, college is very expensive here. When my nephew’s kids were a year and two old, I talked to him about setting up 529 plans for them–it’s a program geared toward paying for college. He’s on it!

    Good post to get us all thinking.

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  4. This is a great post, and is somewhat geared toward me.
    I have been, in the last couple years, trying to pay off debt, and set aside for retirement.
    It can be overwhelming, because you think you can never overcome it, and you think you are doing nothing but a drop in a bucket. This is true, it is nothing more than a drop in a bucket, but over time, those drops can become an ocean.

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  5. We should always try to ensure we have a financially secure future. But it’s easier said than done. When I lived in London I frequently read about company pension plans where the money had disappered so I had no interest in a British pension. Instead had an investment bank invest my money. Alas in 2008 they managed to lose quite a lot of it. And in Sweden there are even public entities where the money in the pension fund is missing. Heaven help the ones who work there and have paid their contribution to it. The only insurance you have in life is yourself. We can try to secure our financial future but it doesn’t always work.

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  6. I am retired and now working on my “encore” career. Even in retirement, one needs to think about some of these questions to ensure the money lasts. I would encourage a young person to take up a pension plan and look at saving for the long term, but I think it is a tougher thing to do now than it was thirty years ago. Companies don’t offer the same kind of pension plans anymore, which makes personal saving more important but it also means saving more money.

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  7. I am working on this as a freelancer now, but it was much easier when a plan was set up when I was teaching. I worked long enough for that to become vested. Now I have to look into saving more as a freelancer.

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  8. Phoenicia – We have the same problem in the U.S. Many seniors are living hand to mouth. More companies are doing away with company-paid pension plans so employees need the discipline to save for their futures. Tough to do when you’re sending your children to college (which is wildly expensive in the U.S). at the same time that you need to be putting money away for retirement.

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    1. It is difficult to focus on the future if you are struggling to live now. There will always be something else you could spend your money on but when the extra cash exists it brings freedom.

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  9. We started early (right when we got married) saving money and it’s now been 20+ years of saving. Both of our parents didn’t save much so we decided to save more when we were younger and it has helped a lot. Great reminder, thanks for sharing.

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  10. There was a time when I felt pretty smug about our financial planning, but that was when I was married and owned a home. The mistake I made was listening to my husband about putting all of our eggs into his retirement plan because the company he worked for matched contributions. Sounded great, but when we divorced he took the retirement nest egg we’d both worked to build and I was left with the bills. It’s taken a few years to dig out and the future is definitely looking brighter, but that was a tough lesson to learn.

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  11. I think this is going to become a more and more difficult issue for future generations. In the U.S. pension plans have largely been replaced by 401(k)s which are investment portfolios that you can contribute to and defer the taxes. The 401(k) is a perfectly good retirement investment plan but it requires a more educated and more involved employee. The other factor that is changing this is that so much work today is freelance or contractor work and these people don’t always have the benefits they should.

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