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It is so easy to ignore paying into a pension. You may feel that you are too young to have to worry about paying into a pension or that you cannot afford it. Some people even worry that they may not make it to retirement, but some pensions can be transferred to other people if you do not reach retirement age. However, many people keep saying that it is wise to pay into a pension as soon as possible. So what are the reasons for this?
The more years you pay in the bigger pension pot you have
As will any investment, you will get a bigger pot of money if you pay in more times. This means that if you start paying in early on in life, you will build up a big pot by the time that you retire. Having a bigger pension pot will make a huge difference to the quality of life when you retire. You will be able to afford to go on holiday more, do more things. Buy more and even eat better. You may even be able to use it to pay for a better care home or for nursing care at home. Having a bigger pension can certainly make a big difference in retirement and you may even be able to afford to retire early if you have extra funds.
Employers will pay in more if you pay in for longer
If you have a pension through your employer then they will be paying in as well as you. This means that you will be able to gain from their investments as well as your own. The longer you pay in, the loner they pay in and you can gain even more than if you were just paying in without them. Obviously if you have a private pension no employer will pay in.
If you lose your job and stop paying in you will have made a start
You may worry that you will not work for that company for long and therefore it is pointless starting a pension scheme. However, every little bit will help towards your retirement. You can always move a pension scheme to a new job with you or keep adding it to it after you have left. You will have at least have made a start on saving towards your retirement.
The investment will have more time to make money
The longer that you have a pension pot, the more able it is to be able to gain interest and increase in value. This means that it will be able to start gaining in value for longer. So if you start earlier you will need to pay less in each month compared to what you would have to pay in if you delayed.
It will get you into good investment habits for life
By regularly investing into a pension you will see the benefits of long term investments. This could help you to start other types of investments as well and you will be able to get into a good habit of putting money away for the future each month.