The Motley Fool

It’s never too early, or too late, to plan to beat the State Pension

The day I arranged life insurance seems like only yesterday. I was 29 and I wanted to provide for my wife in the event of my death.

I got a good deal on a death and serious illness/injury policy with a 30-year term, just insurance with no endowment or anything like that added (and I’ve always found it puzzling how the two are combined). And it expired last year.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

I made one claim for serious illness, but as I’m still alive I’m not too unhappy that my wife didn’t get to pick up the big money.

I’ve done a lot in the 30 years of my insurance policy, but wow, did the time go fast.

And the expiry of that policy really brought home to me what a folly it is for young people to ignore retirement planning as though it’s so far in the future that you don’t have to worry.

Start early

The best thing I ever did, even better than securing peace of mind about my wife’s security if I’d died young, was to start investing for our retirement at an early age. Now, we’re really not wealthy, but my wife and I have investments that should be enough to provide for a reasonably comfortable retirement. Not that I have any plans to retire just yet, as I enjoy what I’m doing.

The key lesson to me is that it’s never too early to start investing for your retirement, and I could have done better had I started even younger. After I left my first job, of the options I had with my modest company pension contributions, I chose to take the cash and spend it. It was the early 80s, and I can’t remember what I bought, but I remember it was about £1,000. 

Had I put that £1,000 into a stock market investment and secured a 6% return per year (which you could get today from Royal Dutch Shell dividends alone), it would now be worth an extra £7,700 to add to my pension pot.

£380,000

In fact, if you’re starting out investing today at the same age I started working, can manage to put away £200 per month and achieve the same 6% target per year and reinvest all of your dividends, by the time you get to my age you’ll have around £380,000 in your pot. And this should rise with inflation if you can keep increasing your contributions over the years. And if you use a stocks and shares ISA, not a penny of it will be taxable.

But what if you’re not still in your 20s, you’re more my age, and you’re worried you haven’t made sufficient provision for your sunset years?

Not too late

As you’ll presumably be earning more than a fresh young worker, could you put away £500 per month if you cut out unnecessary expenditure? Even better, if your mortgage is already paid off, perhaps you could stash away a similar amount for your retirement.

Investing £500 per month and getting that same 6% return per year, would mean that in 10 years you’ll have accumulated more than £80,000. And when you get there, if you can mange 5% per year in dividends from that, it would add almost 50% to your State Pension income.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.