Parents with children under 18 are feeling the financial pressure, with more than two thirds (69%) of parents worried they’re not saving enough for retirement.
According to Standard Life’s Retirement Voice report, 30% of parents with children under the age of 18 find their financial situation difficult, compared to 22% of people without children. Two thirds (65%) of parents with under 18s worry about spending too much money now in case they run out of money in the future.
Standard Life’s report comes during a second full year of high inflation, with the cost of essentials like food and household bills outpacing income rises. For parents this is combined with increasing expenses related to childcare, schooling, and kids’ activities.
Dean Butler, managing director for retail direct at Standard Life, said: “Many of us can relate to the pressures that parents face juggling immediate financial priorities with trying to save for the future, be that for a particular goal or into a pension. It’s important however that parents don’t sacrifice their own saving and retirement goals entirely to focus solely on the here and now.
“Retirement may seem a long way down the road but thanks to the power of compound investment growth, the earlier you start saving the more you will have when you get there. Even contributing small amounts to your pension all adds up over time – our calculations found that contributing just 1% more than the minimum required under automatic enrolment could lead to £58,000 more in retirement.”
Tips for parents saving towards retirement
Look at your finances as a whole
Parenting can be all-consuming and it’s sometimes only possible to live in the moment. However, taking a holistic view of your finances can boost your financial confidence and give you an indication of whether you’re in a position to save for the future.
Make the most of pension contributions
If you leave work for a few years to raise children, you’re still entitled to basic rate tax relief on pension contributions, even as a non-taxpayer. That means for every £80 you are to pay into your pension, you’ll end up with £100 in your pension pot. The maximum you can pay in as a non-taxpayer is £2,880 a year, equivalent to £3,600 once tax relief is added.
Claim child benefit
If you have a child under 12 and are claiming child benefit, you’ll get National Insurance credits towards your state pension even if you’re not in paid work. That means that when it comes to claiming your state pension in the future, you’re still treated as having contributed.
Understand your pension rights
If you’ve had a baby and are planning to take maternity leave rather than stopping work, then your employer must continue making contributions into your pension for the duration of your maternity leave. If you are able to do so, consider continuing paying into your pension while you’re off work.
