Why didn’t someone tell me this before…

This is a Woman&Home advertorial.

Everyone will get a state pension of around £155 a week* from April 2016, so I don’t really need a pension. WRONG: Not only will anyone who has already retired not benefit from the new increased pension, even those who retire after 6 April 2016, may not get the full amount. That’s because you will have to pay National Insurance contributions (NICs) for even longer to qualify. And it’s mainly women who will miss out. Even by the mid-2030 by when more people will have paid NICs for longer, 20% will not receive the full state pension. Also – can you really live off £155 a week? If you have no other savings, how will you repair the car, replace the boiler or take a holiday?

I’ve got plenty of time to think about retirement – I am way too young, and I can always start saving later on or just keep working because my employer can no longer force me to retire. NOT ALWAYS TRUE: Latest government figures show that almost half the long-term unemployed are aged over 50 and 1 in 4 women currently reaching state pension age have not worked since they were 55. While the number of people working past age 65 has now exceeded 1 million, partly because employers can no longer force you to retire at a certain age, there are no guarantees that you will continue earning or earning enough to fund retirement. And while you may not want to think about this, a study by the Office for National Statistics shows that the “healthy life expectancy” for females is now 64.1 years – almost a full year less than the state pension age of 65, which comes in from 2018. That means the average woman can expect to live 83.4 years – but to lose their overall “good health” 19 years earlier. Not a nice thought, but one you need to face. Don’t gamble with your future – start planning now (just in case).

I own a property, so I can rely on that to fund my retirement. NOT OFTEN TRUE: The problem with selling up, downsizing and releasing a large chunk of equity to fund retirement is that the figures do not always add up. Yes, if you are selling a £2m mansion and moving to once costing £1m you will have plenty in the bank. However, move from a £600,000 house to one costing £400,000 and you will have around £175,000 in the bank (remember the costs!). That may seem like a fortune, but if it had to last 25 years that would be around £7,000 a year or a little under £135 a week. So do your maths.

I have to join my employer’s scheme under “auto-enrolment” so I’m sorted. RARELY TRUE: Yes, auto-enrolment has brought millions into employer pensions for the first time. However, the contribution rates are not enough to secure a comfortable retirement. Currently you only need to pay in 1% of earnings and although this will rise and employers pay in too, most expert say you need to set aside far, far more. To find out how much will be paid into your pension and how it will increase visit moneyadviceservice.org.uk/en/articles/automatic-enrolment-into-a-workplace-pension. Remember, you can usually top this up.

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