Many self-employed use savings for pension fund

Wednesday 3 August 2016

With the sudden rise in people turning to self-employment, it's becoming increasingly important that those who work for themselves consider what they'll do when it comes to retiring.

Not only do you need to think about what you'll do with your clients when you retire, but it's also essential to contemplate how you will fund your retirement.

New research has shown that most people who are self-employed choose to put some of their earnings into a savings account to help them through retirement, rather than solely relying on the state pension.

The 'Retirement Readiness Report' from insurance agency Aegon found that just over a third (36 per cent) of independent workers choose to contribute to a private pension fund, with the others pursuing different options to fund their retirement.

It found that others want to expand their business and live off its sale once they stop working, while some intend to continue working past retirement age to top up their income and keep busy.

Unsurprisingly, the report found that people who work for themselves are more engaged with retirement plans than the rest of the population. Being organised and prepared are key foundations for running a successful business, so it's no shock that people who are self-employed are looking into these arrangements way before they are planning to retire.

Suggesting that independent workers have more spare income than the rest of the population, the findings also reveal that they contribute more to pension schemes than people who have an employer. On average, self-employed professionals had £40,400 in their pot, which is more than £5,000 higher than the average for the general population.

Being self-employed, as a consultant or contractor, often means you can earn more than if you were working for another business. The report suggests that this additional income is helping people pay more into pension schemes, whether privately run or a personal savings account they have set up.

Steven Cameron, pensions director at Aegon, said the research shows that self-employed professionals have particular needs and aspirations when it comes to saving for retirement.

Seeking the advice of professional accountancy services can help ensure you are in a good position when it comes to retiring, as well as managing your finances throughout your working life.

 


By Victoria McDonnell

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