How to Start a Pension

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  • Find out how to start a pension
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My step-by-step guide on how to start saving for your retirement with a pension will help you make the best decisions for your current circumstances so you can effectively plan for your Golden Days.

How to start a pension in 5 easy steps

  1. Check to see if you have any workplace pensions – 401(k) from previous employers
  2. Consolidate any existing pensions into your new pension (most brokers are able to do this for you)
  3. If you are not employed or are self employed select a broker to help you with your pension needs
  4. Set up regular, or one-off contributions
  5. Manage your investments

How to Start a Pension if You Have Just Started Your First Job

So, you have started your first job and want to take control of your finances and your life. It is likely that your employer will offer you a 401(k) pension scheme, so if you have just started your first job, check the criteria below to identify whether you qualify for a workplace pension.

Eligibility Criteria

  • You must have completed 12 months of employment
  • You must be over 21 years of age

Benefits of a 401(k)

  • Tax-deferred earnings
  • You determine the level of contributions from your wage
  • Employers may make matching contributions to employees’ contributions at the plan year-end
  • You can borrow from your account for specific reasons, such as buying a home or for medical expenses

How to Enroll in a Workplace 401(k)

Prior to eligibility, you should be given a summary of the plan for your review, and all the forms needed in order to participate. If this is not the case or if you have questions regarding the plan, contact your HR department or employer for details of their 401(k) plan.

How to Start a Pension if You Have Had Several Jobs

If you have had several jobs, it is possible that you already have several pensions, especially if your employer automatically enrolled you in their 401(k) offering. If you have had several jobs, it is a good idea to check whether you have any pension plans with them, as it makes good financial sense to consolidate any pensions you have into one fund.

Benefits of consolidating existing pensions

  • Increased efficiency in tracking and managing pensions
  • Potentially lower provider costs
  • Maximize earnings made from investments

How to Consolidate Existing Pensions

  • Locate any existing pensions
  • Consolidate into your current workplace pension
  • Maximize your monthly pension contributions to enjoy the most benefits

If you are currently self-employed, read on to discover how to consolidate your existing pensions into your personal retirement plan.

How to Start A Pension If You Are Self-Employed

For self-employed people, the onus is on you to organize and manage your own pension. There is no access to a workplace pension, and you will therefore have to choose an individual retirement account (IRA) to save into. Find out which is the best retirement plan for the self-employed in our dedicated guide.

Benefits of an IRA

  • Deferred contributions, or tax-free withdrawals
  • Complete flexibility on pension contributions
  • Flexibility and a wide choice of investments
  • Easy to access and set up

How to Start an IRA

You will need to consider your investment experience. If you are a reasonably confident investor, then you will probably want to pick your own investments. Luckily an IRA is an extremely flexible investment vehicle and almost any type of investment is possible including stocks, bonds, mutual funds, annuities, unit investment trusts (UITs), exchange-traded funds (ETFs), and even real estate. Though some brokers

Those who are less experienced may want to consider opening an account with a broker who can match you with a ready-made fund that is managed and within your risk profile or alternatively provide you with investment advice. A number of brokers are now offering robo-advisor accounts which provide some of the features of the traditional managed account but at a fraction of the price of a traditional managed account.

  • Identify if you are an experienced or novice investor and your attitude to risk
  • Select a broker
  • Register an account
  • Consolidate any existing pensions into your new pension (most brokers are able to do this for you)
  • Set up regular, or one-off contributions
  • Manage your investments

The Two Main Types of IRA

  1. Traditional IRA – Contributions help lower your current tax rate, though withdrawals are subject to tax.
  2. Roth IRA – Contributions are taxed, this is offset however by the fact that earnings and subsequent withdrawals are tax-free.

Retirement Need-to-Knows

  • Social Security payments can be made at the age of 62.
  • While you work you pay taxes some of which fund Social Security.
  • The Social Security Office pays four types of benefits, namely:
    • Retirement benefits
    • Disability benefits
    • Benefits for spouses or other survivors of a family member who’s died
    • Supplemental Security Income (SSI)

You are entitled to free legal help at if you are experiencing difficulties with your pension plan.

How to Start a Pension FAQs

How Much Will I Need In My Pension Pot?

The general rule of thumb when starting a pension is you should halve your current age and this number represents the percentage of your salary that you should be saving into your pension.

How Much Will I Get From Social Security?

There is no fixed sum that Social Security provides, the size of payouts is dependent on a number of different factors, including your age, size of contributions made, and health.

Do You Need A Financial Adviser When Starting a Pension?

The need for a financial adviser very much depends on your personal circumstances. If your requirements are quite straight forward, then it is easy enough to select your own pension scheme. However, for more complex finances, financial advice can be more than worth the money you pay, and good advice can help you ensure your pension plan will provide adequate savings for your retirement. Financial advice can also help put a profitable investment strategy in place.

At What Age Can You Start an IRA in the US?

You can make contributions to a Roth or Traditional IRA at any age. Though 401(k) and SEP IRA plans are contingent on employment.

Why Start Your Pension Early?

The sooner you get started, the longer your investment will start accruing interest and the bigger your eventual payout will be. Also, if you start saving at an early age the percentage contribution from your wages does not have to be particularly drastic.

Is it Ever Too Late to Start Your Pension?

It is never too late to start saving for your retirement income, however, the later you leave it, the more you will need to contribute to your pension fund in order to save an adequate amount.

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