Are the self-employed saving enough for later life?

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According to the Office for National Statistics (ONS), there were 4.8 million people self-employed in 2017 – just over 15% of the labour market. However, what the statistics also reveal is that just over 45% of those who are self-employed in the 35-54 age group do not have any private pension wealth. This is compared to only 16% of employed workers who are in the same position. In addition, 30% of self-employed people aged 55 and over have no private pension wealth.


It’s not all bad news

Although at first, these figures may seem alarming, it only reflects private pension wealth. While pensions are one way to provide for retirement, it may not be the only investment an individual chooses to make when planning an income for later life. For example, a large proportion of the self-employed also have net property wealth of £250,000. With 28% of those in the over 55 age group having net property wealth of more than £500,000 compared to just 12% of employees in the same age range.


Personal private pensions

If you are self-employed, you could consider setting up your own pension. You might choose to have a personal pension from a private provider. These types of plans can offer savers tax relief on their contributions. The different types of plans available vary from simple stakeholder pensions to self-invested personal pensions (Sipps). The returns you receive on these plans will depend on investment performance and any charges that are associated with the plan. To ensure that you make the best choices for your personal circumstances you may want to consider seeking professional financial advice.


Lifetime ISAs (LISAs)

A Lifetime ISA (LISA) is another alternative way to save for retirement. It’s a type of Individual Savings Account (ISA) that allows you to save for your first home and retirement at the same time. You can save up to £4000 per year into a LISA, and the government will contribute an additional bonus of 25% of the money you put in. Once you have celebrated your 60th birthday, you can withdraw all the funds in your LISA for use in retirement.


Alternative options for retirement saving

There are many options available when thinking about how to provide for your retirement years. You may want to consider all your assets, investments and savings to get a broader picture of what resources you have available to contribute to an income in later life.

You will need to calculate how much money you are going to require and also how that figure may be affected during the years you’re retired by inflation and cost of living. Working with an independent financial adviser, such as one of our Life Centred Financial Planners, will make the process easier and ensure that you understand the implications of any decisions you make. The earlier you start planning for later life, the more likely you are to achieve the kind of lifestyle you aspire to – find out more here.

It’s never too late to review your plans. If you are only a few years off retirement and are concerned about whether you have enough funds, then seeking support from a Life Centred Financial Planner could potentially make all the difference in helping you to look forward to a brighter financial future.


Life Centred Financial Planners help individuals, businesses and families achieve the best quality of life they can with the resources they have. Under our regulated business MRA Ltd, we specialise in cash-flow analysis, taxation, debt management, savings and investments, life centred planning and much more. Life Centred Financial Planners are passionate about working with you to help you achieve your life and financial goals, get control of your finances to enjoy a brighter financial future.