All work and no play
Posted on November 30, 2011 by admin
If all work and no play made Jack a dull boy, what hope do workers aged over 55 have of enjoying life in their twilight years?
The UK economy is hardly going from strength to strength and many ageing workers feel that they might never be in a position to afford retirement. The future is not entirely bleak for the silver workforce, however, as plenty of opportunities exist to save money.
Despite the low base rate, many banks continue to offer good introductory rates on standard cash ISA deals, for example, whilst there are numerous other ways to save for retirement, as will be explored in more depth below.
In November 2011, the annual Financial Planning Survey revealed that 47 per cent of people in Britain are uncertain about their future, fearing they have not managed to save enough money to retire in comfort.
Commissioned by the Institute of Financial Planning, the survey further revealed that 12 per cent of workers aged over 55 thought they would never be able to afford retirement, suggesting current financial concerns are simply too great to overcome.
Following the abolition of the compulsory retirement age in the UK, previously set at 65 years, it would appear that many UK workers are planning to extend their terms of employment for as long as possible.
The prospect of saving enough money to retire in comfort, relatively speaking at least, ought not to be unthinkable for the average British worker earning an average salary.
As noted above, the cash ISA offers an excellent opportunity for workers to save in preparation for retirement. Most banks offer an introductory rate of between 2 per cent and 3.5 per cent for the cash ISA, into which £5,340 can be paid each tax year.
If savers switch lenders when interest rates revert to 0.5 per cent (assuming the base rate does not increase to deal with inflation), it is possible to earn generous rates on savings for a number of years.
Another advantage of the cash ISA is that savers can usually withdraw money at any time without penalty, whilst the account is also tax free. Equally, savers who receive Working Tax Credits need not declare the income generated by ISAs.
A personal savings account may offer greater benefits in terms of interest rates and maximum allowances, but the cash ISA provides benefits that few workers can afford to ignore.
In addition to saving and preferably making more money, workers should also forensically analyse their expenditure with the aim of cutting monthly costs.
Some monthly budgets might already be stripped to the bare limit, but many others are grossly inflated. Reviewing monthly outgoings can help workers free up more money that can be used for savings and investments.
Common expenditure that can be eliminated or greatly reduced to this end include gym membership, satellite television subscriptions, mobile phone contracts and credit card bills, with the latter capable of being reduced with little pain by strategically transferring balances to enjoy lower interest rates.
Even necessary expenses such as food, clothing and petrol can be reduced with a little planning and determination. When more disposable income has been made available, workers can choose to save or invest the funds to make more money.
One potentially lucrative form of investment is gold. Purchasing gold bullion or buying gold exchange-traded funds (ETFs) is a risk like any other form of investment, but it also happens to be one that has a proven history of generating high profits over a long period of time.
