If you reach age 40 and realise that you have not done enough to save towards your future, you certainly aren’t alone. Sadly, more than a third of people over the age of 65 have found that they are unable to retire due to the fact that they will not have enough money to sustain themselves. This means that they will be left without any other option but to continue working past their State Pension Age (SPA).

However, there is a light at the end of the tunnel for those looking to turn their ways around. There may still be a chance for you to save a considerable amount towards your future, so you could enjoy a reasonably comfortable retirement.

What do I need to do?

Before you can begin to sort out your situation you will need to implement and sensible savings plan that you can follow. This will work as your guide for the following decades and you should be able to rely on it for years to come.

Consider implementing the following:

1)    Savings and ISAs

Saving money on your own can help you to build up a fund for a rainy day, which will occur when you retire. It’s vital that you choose a savings account or ISA with a good interest rate, as this will help you to save more money over time. You can either look online to compare your options, or arrange a meeting at your local bank to talk things over with a professional.


2)    Works pension

If you are in fulltime employment and your company offers a works pension, now is the time to take one out. You can speak to your HR manager about the possibility of joining the plan, and maybe even talk with the finance manager to find out how much you could hope to save.

3)    Personal pension

Alongside your savings and works pension, you should also consider taking out a personal pension. If you don’t mind where your money is invested or you haven’t the knowhow to invest it yourself, opt for a generic pension plan. If, however, you feel confident enough to take charge, a Self-Invested Personal Pension (SIPP) could be a better option. With this, you’ll be allowed to choose which companies and shares your money goes towards.

4)    Deferring your pension

If you reach your SPA and realise you haven’t saved enough, you could choose to defer your state pension. For each five weeks that you defer your pension you could accrue an extra 1% of interest on top of your current savings. If you deferred for a full year, this would amount to 10.4% overall. Interest is calculated at the current Bank of England rate.

5)    Funding

You don’t have to base your retirement wholly on your savings and pensions. If you find that you have ailing health and need to move into a care home in older age, applying for NHS Continuing Care funding could help you to pay for your care home fees.

Starting to save for your retirement at age 40 certainly isn’t ideal, but it is still possible. Do you have any other tips for people facing this prospect?