31 Oct, 2018 | Bankis
Would you like your retirement to be higher than your actual working wage? In some countries that is actually possible like Croatia for example, which offers 129% as retirement pay on average. Netherlands and Turkey also provide great retirement rates which is higher than the income while working. The UK is quite behind when it comes to retirement by only offering an average of 29%, which is well below the EU average (71%). So how can you retire like a Croatian and enjoy a higher level of income?
Firstly you might have a list of things you want to do in retirement like holidays, home repairs and so on. All of these obviously cost money and you need to have enough to cover for other essentials such as food and health care. Your State Pension and work pension can help you on your goals, but most likely you’ll need to save extra money to achieve all you have in mind. In order to then create a successful path to a good retirement careful planning comes on board. A good point to start is to use an online pension calculator and find out how much you can save a month and how much can that turn into in the future when you are ready to retire.
Secondly you need to get into your pension benefits. You can in this process get some help for the government. All UK residents under 75 get 20% tax relief automatically. This means you only need to pay in £800 and the government will top this up to £1,000. If you pay more than 20% tax on your income, extra relief could be available. This could mean £1,000 in your pension could cost you as little as £550. As long as you’re under 75 and a UK resident, you can contribute up to £3,600 each tax year. You pay in £2,880 and the government will top this up to £3,600.
Thirdly you need to open a private pension with a reliable service and start to add money into it. You should create a SIPP (Self-Invested Personal Pension) to save for your retirement. SIPPs are for people who want the freedom to choose their own investments, so you have full control on what you invest, how and when to sell and buy units with the company or companies you choose to invest.
By following these steps and controlling your investments you can get the best out of it and retire like a Croatian when it's time for you to step aside from work.