Pensions tips: What to do in your 30s

Following our post on how to plan for retirement in your 20s, this entry looks at what can be done in your 30s.

Typically, your 30s are a time of a lot of change. They may include a higher salary, home ownership, marriage and having children. This shift to settling down and embracing responsibility can also mean viewing the financial situation more favourably, acknowledging the benefits of saving over spending frivolously.

In 2009 the average age of marriage was 30 for women and 32.1 for men, which are both the highest since records began. The number of women marrying between the ages of 30 and 34 increased 6% from 2009 to 2010, and the following graph shows that the total number of people getting married in their 30s is around 90,000 for men and 80,000 for women:

The graph below demonstrates the increase in age of people entering marriage:

The takeaway message from these figures is that the 30s are now the time when people are settling down after their 20s, which in turn typically involves a change in attitude to responsibility as a whole.

This adjustment in attitude could make retirement planning easier as it isn't considered a chore, and the first change should be increasing how much is being put away each month, such as saving more than the minimum contributions if you're part of auto-enrolment. If you're unsure about the benefits of saving into a pension fund, it's worth considering the pension tax relief. Basic rate taxpayers have tax relief of 20%, while a higher rate payer could have in excess of 40% tax relief. This means that if you're a basic rate taxpayer and you save £80 into a pension fund, you end up with £100.

Although the landscape is changing for the better, many women are still set to miss out on a good pension (our series "Challenges facing women in retirement" details the problem) and it's important that as women enter marriage they maintain a pension of their own rather than relying on that of their husband. Worryingly, a report by The Pensions Advisory Service explained that "married women often tell us that they had opted out of all pensions because their husband made all the provision"[4], which is a problem for the 50% of marriages that end in divorce.

Aside from auto-enrolment contributions, another option is to start thinking about diversification. This year the rules on ISAs changed, bringing an annual allowance increase to £15,000 with no restrictions on how much can be cash or stocks. Previously the allowance was £11,880, of which only half could be held as cash. The New ISAs allow couples to put away up to £30,000 a year and transfer between cash and stocks as frequently (or infrequently) as they wish.

For people who already have an ISA, or want to explore other options, self-invested personal pensions (SIPPs) may be an enticing option. These personal pensions allow holders to make their own investment decisions, including but not limited to tracker funds, stocks and shares, carbon credit, commercial property, gold bullion and traded endowments policies. SIPPs are DIY pensions, where the holder is in charge of the investments instead of an adviser. This can be an attractive option, but they require careful consideration and a chat with a professional financial adviser to make sure it's right for you.

With a company pension, ISAs, SIPPs and other potential investments, there are a number of options for creating a sizeable retirement fund. To make the most of the pensions though, it's essential that regular pension reviews are undertaken. These will check such things as the fees being paid and how well the funds are growing, and will bring to your attention whether there are any recommended changes. Our recommendation is a review on an annual basis, and this ensures that you always know how well your pension fund is doing and can have a realistic retirement expectation as a result.

Call 0800 304 7288 for a friendly chat about your pension

Important Information

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:

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