Do you wish for stress-free retirement?

Retirement should be an event that is worth looking forward to, not something to be feared.

07:23 10 September 2013

For individuals who have spent almost their entire life studying, getting a degree, and then working, retirement should indeed be a welcome treat because this is the time that you can finally enjoy the fruits of your labour, taking it real easy and enjoying everything that you put on hold when you just did not have the time to do anything else but work.

The population in the UK is starting to age (on average) and it is a common apprehension that the pension provided by the government will not be continued to be paid to its elderly citizens anymore. As it is, the pension level is already very low, but it can even go lower as the number of pension beneficiary increase.

Be that as it may, individuals who are still in their prime or those nearing their retirement age should not just wait for the axe to fall.  It is incumbent upon everyone to see to it that their retirement days be not bleak due to lack of financial preparation.  The earlier one takes steps to plan for retirement, the better he/she will be able to enjoy it.
Currently, there are two types of basic types of pension plans:

• Defined benefit pension

This type of pension has a fixed amount which an employee can expect come retirement time.  Though a big chunk of the contribution is made by the employer the employee can also be asked to contribute.  This is may be one of the best ways to have a pension plan and it would be excellent if your employer offers this assistance.  However, most companies are beginning to phase out this benefit.

• Defined contribution pension – this type of pension is more commonly offered. The employer and the employee contribute a set amount monthly.  The total aggregate amount becomes the employee’s pension fund come retirement time.

Pension contributions are tax free, which in effect gives you additional savings.