Is it worth starting a pension at 50?
It might seem like it’s too late, but it’s never too late to make your situation better.
Even if tomorrow is your last day on earth, you still have 24 hours to sort something out.
At the age of 50, you still have 15+ years before you can access your state pension.
Do you really want to be reliant on the state for your standard of living?
Remember, the good or bad news is that you might live a long time after and into retirement. How comfortable do you want this retirement to be?
It is better to take some action now to make the rest of your life a lot more independent, dignified, and comfortable than it will be if you do nothing.
Plan for what you do want
Planning is the key to understanding what good looks like in retirement and what sort of income, savings and pensions might be needed to make that happen.
What does a good life look like in terms of
- Health and fitness – able to take part in the sports and exercise that interest you
- Recreation and hobbies – time and space for the fun things in life
- Family and Friends – time, space, energy and funds to meet up with people.
- Romance and Relationships – time with special people
- Finance and net worth – independent, comfortable, secure with plenty of options
- Career and business – if you want to continue with work or business ideas.
- Personal development- able to study and learn new things formally or informally
- Spiritual goals – able to pursue your purpose in the world, community or family life.
It’s much more inspiring to plan for what you want than just accept you may have left it too late, so why bother now!!
Yes, there might be a realisation that may be having it all going to be a stretch, but now you know what you do want.
Take action every day
So, what do you need to do to get to where you want to be?
Some of the gaps between where you are now and what you want might seem daunting or overwhelming.
Here’s where the Japanese concept of Kaizen, meaning change for the better or continuous improvement, might be useful.
You don’t have to achieve everything at once. You just need to get a little better each day.
How about moving towards your goals 1% each day? Would that be doable? You could, of course, do more, but 1% seems possible.
- Physical – Could you get fitter just a little each day, eat better, sleep better, exercise better
- Social – Could you spend more quality time with friends, family and love life
- Material – Could you save 1% more each day for financial freedom
- Spiritual – Could you work on the things that give you a purposeful living
- Mental – Could you spend your time and money on the things that give you authentic happiness.
- Emotional – what actions or activities could you be involved in to make you feel alive and fantastic
Working 1% each day on these things will see you move towards the life you do really want now rather than just wait for retirement to achieve them.
In this instance, you need to work on your financial knowledge, mindset, and behaviours to understand that it is worth starting a pension at 50.
Knowledge about money
- What’s your current net worth?
- What does it cost you to live now, and what might it cost when you are retired?
- What is your savings rate?
- How much money do you need to make work optional?
- What are the principles of sound investing vs speculating?
- Do you know how to track and manage the money that comes into and out of your bank accounts?
Mindset and attitudes to money
- What are your attitudes to money, and how does this affect your ability to keep and manage it?
- Do you think money is the route of all evil or greed is good, or somewhere in between?
- Do you save at the beginning of the month or at the end with whatever is left over?
- Do you check your finances regularly to understand what is going on?
- Have you automated the essential things in your finances, or are you leaving it to feeling like doing it?
It’s likely your knowledge, mindset, and behaviours are playing a crucial part in whether you have enough or need to start taking more action to make retirement a more comfortable experience.
Starting a pension at 50 still gives you 17 years until 67, when you can access your state pension to plan, save, and invest to achieve more of what’s important.
17 years is a decent period to take positive action towards a comfortable retirement.
Boost your pension at 50 with multiple sources of income
If you are looking for ways to start or boost your pension at 50 here are a few ideas
Create your own pension and or additional sources of income – could you use your skills and experience to teach, coach, mentor or sell something?
- Rental properties
- Consulting on what you’re good at
- Teaching people what you love to do that people will pay you for.
- Creating things people will want to buy, often what they like or solves a problem for them.
All of these could be what you create as a pension alongside the more traditional work or private pension pot.
Having an additional source of income could help boost your savings and or even be your pension if it’s something you love doing and don’t need to retire from.
Join your work-based pension scheme – if you haven’t already. You could also increase your contributions to build a bigger pension pot and take more advantage of the tax savings on offer.
Work longer – Possibly not the most popular option but working longer could see you save more and need less money in a pension because you have had an income for longer.
It doesn’t mean working as hard or for as long but working to have some sort of income, whether part-time or on a freelance type basis.
FAQ: is it worth starting a pension at 50?
Is it worth starting a private pension at 50?
- It could well be as money added to a private pension will get additional contributions paid into it in terms of tax back from the government – terms and conditions apply, but a nice boost to your savings called free cash.
- There are a number of tax advantages to paying into a private pension in terms of receiving some of the tax back that you have already paid and later on in terms of inheritance tax.
Is 50 too old to start a pension?
- No, I hope the above answers this question.
- Every little helps towards your comfortable, dignified and independent lifestyle in retirement.
How much pension should I have at 50?
- You want to be getting close to what looks like a comfortable, dignified and independent lifestyle fund size for when you want to make work optional. If you want to retire at 55, you need to be closer to that fund size than if you’re going to retire at 67.
Can I retire at 55 with 300k?
- Yes, you could; it all depends on what you want to do with that £300k. Here is an article on how you might do it.
What is a good pension amount?
- One that allows you to live a dignified, independent, comfortable lifestyle with options. Only you can say what that looks like per year.
- The WHICH report hints that a luxury lifestyle for a couple would be £41k per year. For a comfortable lifestyle, £26k and an essential lifestyle £18k.
- Times the above numbers by 25 to get an idea of the size of fund you might need. If you want to consider the state pension also, then you take that off the above figures and then times by 25.
Can I retire at 55 with 800k?
- You could; this all depends on what you want your life to look like at 55.
- Using the 4% rule of thumb for withdrawals on a fund of £800k could see you with an income of around £32k. Would that be enough to live the lifestyle you want?
Summary: Is it worth starting a pension at 50?
The short answer is most probably, yes, it is worth starting a pension at 50.
In short, what other choice do you have?
Depending on when you want work to become optional, you could have another 17 years of work to plan, save, invest and enjoy your money.
By taking a little bit of action every day on your knowledge, mindset and behaviours, you could significantly boost your savings and pension at 50, making a comfortable retirement much more likely.
What form that pension takes is up to you.
- Rental properties
- An ongoing business
- Or something else that will provide you with an income in retirement.
All of these are worth considering in your planning for a comfortable retirement.
There you go; those are my thoughts on is it worth starting a pension at 50; let me know yours in the comments below.
- Is your life, job and financial admin in a mess?
- One or two months away from financial disaster if you quit?
- Not enough time or money to achieve what’s most important to you?
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What’s likely to be the outcome if you don’t make some serious financial plans and start saving?
Without making some clear plans you are at real risk of having nothing to fall back on when things change for the worse.
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