Why you need to save for retirement

If you are planning financial freedom when you retire, start thinking about setting up your retirement fund now if you haven't already.

These days, because of good nutrition and healthcare, people are living much longer. And because of the longer life, make sure your pensions and savings allow you to enjoy your lifestyle at retirement.

It is important to save for retirement to ensure that you have an adequate retirement income to support your lifestyle when you eventually retire. The UK basic state pension for 2010-11 is £ 97.65 per week and if the basic state pension is your only source of retirement income, you are likely to have to take a part-time job to supplement your income as you go on pension.

There are several financial questions you should ask yourself at this stage:

Do you want enough pension to support your new lifestyle?
If you are employed, do you benefit from your employer contribution to your pension? Use this free money from your employer to build your retirement fund.
Are you taking advantage of the tax system to increase your retirement fund?
Are you using the power of compound interest to build your retirement pot? The sooner you start saving for your pension, the bigger your retirement fund when you retire. Let time and the power of compound interest work for you.
Retirement savings are often not easy, especially when setting up a family and paying off your mortgage. True, family needs should come first, but your start saving for retirement planning should not be completely ignored because it takes time to build a retirement fund to support you in retirement.

Some sacrifices must be provided to enable you to start saving for retirement. For example, it is a good opportunity for you to quit smoking, reduce pub crawls or eat out.

Initially, you can save a small amount each month. Take advantage of your company's contribution to building your retirement fund. Then increase your savings as your financial situation improves.

The most difficult part of retirement planning is taking the first step. Once you set up your savings or investment account, money is withdrawn from your bank account each month by direct debit and you do not have to think about it until you decide to increase your savings when you are able to.

Retirement savings may not be a priority when you're in your 20s, because retirement seems such a distant future. However, to build a decent retirement fund as you reach retirement age, however, you need to start saving in your early 20s. Use the combination power in your employer contributions, tax benefits, compound interest and above all, give time to build a substantial pension fund.

It is very important to consider your retirement planning somewhat before retiring from your full-time job. You can then look forward to this new phase of your life with anticipation, knowing that your financial planning for retirement will be successful in supporting your new lifestyle.