If You Don’t Plan For Your Old Age, What Will It Actually Be Like?

Your future happiness is in your own hands…

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Nobody likes to think about growing old.

I understand that, I don’t relish the prospect, either.

But you still have to plan for it, otherwise growing old could be far worse than you could possibly imagine. Unfortunately, too many of us don’t even try.

retirementAn astonishing seven out of 10 over-50s admit they have no plans in place to deal with growing old, according to new research from cloudbuy.

I’m sure many of those have done bits and bobs, such as contributing to a company pension, and maybe taking out the odd ISA, but that’s as far as it goes.

Time Is Your Best Friend, And Worst Enemy

Too many leave it to the last minute to start investing properly for their final years, and only realise their mistake when it’s too late.

Partly, that’s understandable. You have so many financial priorities when you’re younger, such as managing a mortgage, funding the kids through university, covering everyday bills.

It is easy to get distracted from longer-term investment goals. Retirement can seem a lifetime away.

The problem is that it can take a lifetime to save enough money to enjoy your retirement.

Why You Must Start Saving Today

The first pound you invest will be the best pound, because it will be invested for the longest. So the sooner you start, the better.

And the earlier you start, the more risks you can take, in the hope of generating a higher return.

Pound CoinsOver the longer run, that can only mean the stock market.

At age 30, you need to save £110 a month to build a pension fund worth £100,000 in today’s terms by age 65. This assumes investment growth of 4% a year in real terms, after inflation and charges.

If you delay until 40, you will have to save £194 a month to hit the same £100,000 target. If you don’t start until 50, you will need to save a daunting £406 a month.

Even then, £100,000 isn’t really enough to live in comfort and ease for the rest of your life. Ideally, you should save a lot more than that.

But what if you don’t save?

Who Wants To Work Forever?

More than one million over-65s have come up with a practical solution, by continuing to work beyond the state retirement age. Some enjoy what they do, others have no choice.

Don’t assume you’ll be fit enough to work into your late 60s or 70s. You might fall seriously ill and be unable to work.

If that happens, you’ll be glad you set money aside for the future.

Because if you don’t, you will have to scrape through on whatever the state throws your way. The new flat-rate state pension, to be introduced from April 2016, will be worth £144 a week in today’s money.

That would give you an income of just £7,488 a year. If you thought you were short of cash now, imagine living on that.

Your Happiness Is In Your Hands

It is easy to take a happy-go-lucky attitude to life when you’re young, but you won’t feel happy or lucky if you’re struggling for money in your final years.

Nobody likes to think about growing old, but to have a chance of enjoying it, you need to start investing today.

So what will your old age be like? Frankly, it’s your call.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey doesn't own shares in any company mentioned in this article.

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