Any self respecting teenager let alone 20 something will be able to figure out that current state pensions do not sound like much to live on. Pensioners can also get money from the benefits system but this still means money can be tight for many years, even if you have worked for your whole life.
The latest figures from the Office for National Statistics show that 53% of single UK pensioners had an income of less than £10,000 in 2008-9.
So you really need to hammer home that it really does count to start saving early. Teach them about compound interest because compound interest means if you save regularly from a young age, you will be better off than if you save more later in life.
Most pensions experts say that you should top-up the pension provision from the state with a workplace pension or a private pension.
Explain to them that In a final-salary scheme, the investment risk is taken by the employer and you are guaranteed a retirement income based on pay and length of service.
But generally a pension is a long-term investment. Remember investments, unlike savings, can go down or up in value depending on the success of the investment - such as shares on the stock market.
Explain to them that you will not be able to spend the money you put in now until you retire. However you do not have to pay much tax on this investment.
Let them know that if you join a workplace pension scheme, money comes out of your pay packet and into a pension pot. Your employer also puts money in, and there is tax relief on all this from the government.
You can then tell them that when you retire, the pot of money that you have built up can be used to buy a regular income in retirement, called an annuity.You are never too young to start saving for a pension, get your children to talk to an IFA about planning and saving for their futures
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