The Motley Fool

No retirement savings at all? This is what I would do

Having no retirement savings can cause worry and stress for any individual. After all, the State Pension amounts to just £8,546 per year. As such, it’s unlikely to be sufficient to provide financial freedom in older age for most people.

The good news is that there may never have been a better time to plan for retirement – no matter what an individual’s age. A variety of products are on offer, while a number of investments could prove to be an effective means of improving an individual’s financial prospects in retirement.

Time horizon

One of the most important considerations to make when planning for retirement is how long an individual expects to work for. Should this be a relatively short time period, for example a few years, it could mean that they are less able to take risk with their investments. That’s because they do not have the time required to recover from potential losses in time for the date that they will require the funds from which to draw an income.

On the other hand, individuals who have a long-term time horizon, perhaps 10 years+, could afford to take some risk – provided they are comfortable doing so. This could mean they have greater scope to invest in a variety of assets that may be able to generate capital growth pre-retirement, with the potential to put in place a sizeable nest egg by the time retirement comes along.


However long an individual intends to invest for before retiring, utilising tax-efficient accounts could prove to be a sound move. This could take the form of a Stocks and Shares ISA, for example. Interest income received from investments such as cash and bonds is not subject to income tax within an ISA, while capital gains and dividends from shares are not subject to taxation. This could boost an individual’s overall returns, with an ISA providing considerable flexibility should the money be required before retirement.

For individuals who are able to invest now and keep the money invested until aged 55 or above, a SIPP could be a worthwhile move. Contributions are not subject to income tax, while 25% of withdrawals are tax-free. On its own, this tax benefit could make a significant difference to an individual’s nest egg by the time they retire.


The evolution of the internet has made it easier than ever for investors to take control of their retirement plans. In the past, a wealth manager or similar was often required to open various accounts, with management fees often being exceptionally high. Today, in contrast, a variety of financial products can be opened and managed online by an investor, with relatively low costs. Similarly, the cost of buying and selling a variety of assets has also fallen, thanks to online dealing.


While having no retirement savings may cause a degree of worry, it’s never too late (or too early) to plan for retirement. Through determining a level of risk in terms of time horizon, utilising the tax benefits which various financial products offer and keeping costs to a minimum through the use of online products, any individual could improve their financial prospects for retirement.

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