Pension Alternatives: What Are They and Should I Consider Them?

Most people will have some sort of pension when they retire. But planning for retirement does not start and end with pensions. The fact is that pensions are just a tax-friendly way to save up for retirement, and there are other options you can consider alongside a pension.

The best option these days is to see your pensions as part of an overall retirement strategy. So, what are the alternatives to pensions?

Here are a few options for saving for your retirement that you could use in addition to pensions.

ISAs

ISAs are probably the most popular option when it comes to alternatives to pensions. Cash ISAs provide you with a simple way to save money without paying tax on the interest you earn up to an annual limit (£20,000 for the 2017/2018 tax year), helping to make your money go further.

There are also stocks and shares ISAs. These are quite different to cash ISAs, but they provide you with another way to make your money go further. You can share your annual ISA limit between both types.

ISAs provide you with a viable alternative to pensions. They also have the benefit that you have easier access to your money if you need it, perhaps in the case of an emergency.

The downside is that you don't get a guaranteed income when you retire. Once you've spent the money, it's gone.

Downsize

Another area to look at when considering alternatives to pensions is property. If you buy a property and move up the property ladder, there is a good chance that it will increase in value over your lifetime. By the time you retire, you might be in a good position to downsize your property and free up a lump sum.

But nothing is certain, and property prices can also go down, so it's worth keeping this in mind.

Invest in Property

Another option is to invest in buy-to-let properties. If you can build up a portfolio over the years, you could then use this to fund your retirement.

This is a much more involved way to provide for your retirement, and it certainly has its risks. It's also not as attractive as it once was. There is also work involved finding tenants and maintaining a property.

When you retire, you could then either keep working as a landlord to bring in an income, or you could sell the properties and use the money to fund your retirement.

Invest in Shares

Investing in shares can be a good way to save up an income in retirement. However, this is something you want to approach carefully, so speak to a financial advisor before you start.

With a low-risk portfolio, you can invest slowly over many years and build up cumulative wealth. This is not a good way to earn lots of money quickly, but over many years it can be an effective and low-risk way to build up wealth to fund your retirement.

Let Us Help with Your Retirement Planning

These are just a few of the alternatives to pensions when you save for your retirement. Every situation is unique, so it is well worth considering all of your options.

When it comes to retirement planning and personal tax planning, we would be happy to look at your situation and discuss your options. We've been advising people on planning for retirement for many years, and we can help you to formulate a plan.

The golden rule is so start planning as early as possible because you will have more options available and you can save up more over the years, leading to a better chance of enjoying a comfortable retirement.

To kick off your retirement planning, call us on 01252 312561 or you can email us at info@keith-graham.co.uk. Alternatively, you can fill out our online enquiry form and we will get back to you as soon as we can.