Managing my money for young adults
Managing my money for young adults

This free course is available to start right now. Review the full course description and key learning outcomes and create an account and enrol if you want a free statement of participation.

Free course

Managing my money for young adults

6 Thinking ahead about your pension

Described image
Figure 4

It may seem odd to think about a pension as soon as you start your working life but the fact is that the earlier you start to plan for income in later life the better. The more you can save for your pension in your 20s and 30s the less you will need to set aside for it each month than if you start later. If you start to plan a pension from your 40s or 50s it might simply be too late to build up sufficient funds to retire when you want to or to have the standard of living in later life that you aspire to.

A minimum level of pension income is provided by the state pension – although this is, for most people, not enough for a comfortable retirement. So you need to supplement what the state will give you with your own pension – a pension that might come via a workplace scheme (an occupational pension) or a scheme that you arrange personally (a personal pension).

The basics of pension planning are reasonably straightforward.

  1. Estimate how much income (after tax) you need to have a comfortable retirement. This means forecasting what your spending needs will be.
  2. Deduct the amount of state pension you expect to receive and when you expect to receive it (bear in mind that the age at which the state pension is paid is moving upwards).
  3. Find out how much you need to invest each month to ensure that the fund built up over your working life provides the income needed to bridge the gap between the outcomes of the first and second steps.

This is not a precise science but you should get a fairly clear idea of your needs through this three-step analysis. Repeating this analysis as you go through your working life will keep you on track. One way to deal with any discrepancies between your forecast and the amount of income you need is to shift the age at which you start you retire. With the exception of certain specified occupations, compulsory retirement ages in the UK have been discontinued.

Activity 4  How will your spending change? 

By signing in and enrolling on this course you can view and complete all activities within the course, track your progress in My OpenLearn. and when you have completed a course, you can download and print a free Statement of Participation - which you can use to demonstrate your learning.

Click on 'SIGN IN to enrol' to get started.

You can find out more about registering and OpenLearn in our FAQs.

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has over 40 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to university level study, find out more about the types of qualifications we offer, including our entry level Access courses and Certificates.

Not ready for University study then browse over 900 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus