Good fortune or hard work?

By Tom McPhail | 09 Jul, 2008 

Few things in life that are worth having can be acquired without effort. If you are lucky, then a decent retirement income may just fall into your lap. Look at other aspects of your life though; your marriage, your children, your home, your health, your career: Where you have enjoyed good fortune, happiness and success, has it happened through hard work, or by simple good luck? Saving for retirement is just like anything else; if you want to do well, then you will probably have to work at it.

Unless you start very young, then you need to have in the region of 15% or more of your income going into a pension every month right through your working life, in order to build up a decent pension fund (for comparison, the average funding rate to a final salary pension scheme is now around 28% of earnings). Once the money is in your pension fund it needs to be invested well too.

All too frequently I come across investors who have lost track of savings that they have built up in a pension; they don’t know where it is invested or how it is performing. Given that this can frequently involve tens of thousands of pounds, it does seem a lamentable waste. Most people I know could do with some extra income; they would like to enjoy a higher standard of living. Making your pension savings work harder for you is a way of maximising the income you can enjoy in retirement.