Philosophy Contented Dad on 20 Dec 2008 09:21 pm
I Found Financial Freedom - And It Was Really Easy!
How did I manage this?
Like I said it was easy – I just lived long enough to draw a good company pension that had been accruing since 1969.
A lot of readers will now be rocking back on their heels and doubtless saying to themselves “ smug old bastard “ what does he know about the world today and the problems we face trying to make our way.
Absolutely right in many aspects – the world today is a completely different place from the one I grew up in. In the nearly forty years of my working life we seem to have thrown out an awful lot of bathwater with babies.
What do I mean by this?
Above all the idea we take responsibility for our future financial wellbeing.
What is all that about?
I was lucky I didn’t have any choice – if I didn’t join the company pension scheme I didn’t work, no ifs, no buts, that was it.
Today the same company pension schemes have become too expensive for many companies to sustain on their balance sheet.
That shouldn’t stop you making some provision, by yourself if need be, better if your employer helps along the way, but one thing that can be guaranteed – hit your sixties and start to think about stopping work without an adequate pension and life will be far from a bed of roses.
Practical measures?
Take a look at the pension contributions HMRC allow you to make and work out the most that you can afford to pay into a scheme – if you start at around five percent of gross income in your twenties you will simply be reflecting the amounts we used to pay into schemes in the sixties. Contribute more if you can – we also had a company contribution adding to the value of our fund.
Don’t leave it any later than you possibly can – a small salary “sacrifice” early in your career will make a huge difference at the end.
If you are in work, don’t tell me you can’t make this sort of sacrifice – it is exactly what it says “a sacrifice” but that has always meant giving up a little now in the hope of future gain. Its just that nowadays we give a small sum to a pension provider instead of a goat to the “gods”. My guess is that most pension providers would struggle with the idea of depositing a goat in your scheme plan.
Remember its nobody’s job but yours to make sure you live to a ripe old age, enjoying the fruits of your well earned retirement – and don’t moan that you will have to work longer than we did – you will still be able to enjoy the same time not working, if you start to make some provision now, simply because your life expectancy is greater than previous generations.
And what’s the really good news about all this? Well not only will you reach a contented old age, but that five percent gross will cost you less in real terms – because the government does not levy income tax on pension contributions.
Oh and another thing, pay your contributions monthly by standing order – don’t expect you will have the will power to save it all up for a year and sling it all in a lump sum – you won’t!
One last thing
If ever things get really bad and the wheels fall off your plan – your creditors cannot touch your pension scheme, whereas other savings and investments could be used to pay them back.
I guess I’ll just sit back now wait for you all to tell me what a bad thing pension schemes are!
