I have roughly £100 spare a month to put into a pension. Any advice on what to do with my money?

I am a self employed hairdresser on an average wage of 30k a year. I have roughly £100 spare a month to put into a pension. I am aiming to retire at 60 years old. Any advice on what to do with my money? Thanks.

Hi Katie, I’m glad you’re taking action with retirement planning because so many self-employed workers tend to neglect this area of personal finance. To retire at age 60 is a great aspiration, although well below the state pension age, which will be 67 by 2028. The onus is very much on us all, as individuals, to take control of our own retirement planning.

If you’re just beginning your journey of building up a pension, the product you choose is arguably of less importance than the habit of simply getting started! You haven’t mentioned your age, but the sooner you begin, the more time you have to benefit from the effects of compound returns.

The Boring Money ‘Compare and Choose’ function is a good place to start for choosing a pension provider.

https://www.boringmoney.co.uk/pensions/pensions/

Use the search filters to help find your preferences around ready-made solutions v DIY, green and ethical options, providers with the best online experience etc.

Once you’re up and running with a pension, you’ll get more of a feel for the ups and downs of the stock market. You’ll also begin to notice the benefits of tax relief helping your fund to grow.

More important than your choice of provider though, is to push yourself to increase your contributions over time. £100 per month is a good start, but you’ll almost certainly need to bump this up over time.

You might find it useful to have a play around with a pension calculator, such as this one on the PensionBee website:

https://www.pensionbee.com/pension-calculator

This will give you some idea of how much retirement income you might expect in the future, depending on how much you pay in and how many years you still have available to work.

The main thing is just to get started and try not to feel disheartened if the numbers look impossibly challenging. Once you’re in the savings habit, motivation will increase as you see your savings grow. Just be prepared for downward movements as well as increases in value. That’s part and parcel of investing for the long term. Patience and discipline are two excellent characteristics to develop.

One final point to consider, is that in addition to starting your pension provision, it’s a good idea to build an emergency fund, if you don’t have one already. You can ready a bit more about that in my article here:

https://growiser.coach/build-an-emergency-fund/

Hope that helps and best wishes on your retirement planning journey.

Graham