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Securing Your Future: A Tradesperson's Guide to Pension Planning

Rhino Trade Insurance 15 June 2024

Pension planning for self-employed tradespeople can be a bit of a pain, but it's best to start thinking about your long-term future sooner rather than later. As much as we all feel ‘forever young’ like the song goes, pensionable age will come to us all one day, so let’s make sure we’re prepared. 

That's the basis of our blog post today - a guide on how to plan for your pension as a tradesperson. When running your own business, you juggle various factors like a fluctuating income as well as missing out on benefits like employer contributions. 

It's best to start thinking about your pension as soon as possible - whether it's a fully-fledged private plan or making a small monthly saving can make a whole lot of difference. So, let's find out why you need to start thinking about your financial future today. 

Why Bother Planning?

First things first, let's address the big question: how can you start planning for retirement when you're knee-deep in work and deadlines?

Well, think about it this way: if you are a carpenter, you wouldn't start a job without a drawing, taking measurements and finding the right materials. Likewise, as an electrician, you wouldn't instantly start a house rewire without a full sweep of the property to understand the lay of the land. Your financial future should be the same - your retirement may feel like lightyears away, but a blueprint for your pension is the best thing you can do before your retirement party sneaks up.

Some interesting stats to think about: 

  • There are an estimated 5 million self-employed individuals, which make up 5% of the UK workforce. 
  • Of those 5 million, roughly half (2 million) are not consciously saving into a pension pot. 

So, What Are Your Options?

Alright, now that we've established why retirement planning is essential, let's dive into the options you have. 

State Pension: Ah, the good ol' state pension. It's like the foundation of your retirement plan – steady and reliable, but not always enough to live the life you may want to lead. Currently, the UK state pension age is gradually increasing, so make sure you're up to date with the latest info. Depending on your birth year, the pension age currently ranges from 66-68 (with a view to further changes). Find out more here

Self-Employed Pension Options: Now, if you're a self-employed tradesperson (as most of you reading this probably will be) – you've got a bit of legwork to do. But fear not! You've got options like personal pensions, SIPPs (Self-Invested Personal Pensions), and stakeholder pensions. Each comes with its own pros and cons, so doing a bit of research and talking to your accountant can help you find the best fit for your needs.

What Should You Be Doing?

Start Early, Thank Yourself Later

Starting early on your pension savings is like laying the groundwork for a solid foundation on a construction site. Of course, it might not seem urgent now, but picture this: you're a little older, maybe a tad creakier, and retirement is looming on the horizon. By starting early, you're giving yourself the gift of time - time for those contributions to grow and multiply, thanks to interest. 

So don't wait until you're sporting a few more grey hairs - open a fund and save those pennies away today. Your future self will thank you for it, especially when you are sipping on a beer enjoying your retirement! 

Set Realistic Goals

Setting realistic goals is crucial when planning for your retirement, especially for tradespeople. While it's tempting to dream of holidays in the Maldives and leisurely days spent down the pub, it's essential to ground those dreams in reality. 

Consider factors like what your living expenses will be (will you be mortgage-free or will you want a new car) whilst also thinking about lifestyle choices and what you will get up to in your retirement. 

By setting achievable goals, you're laying the groundwork for a retirement that aligns with your financial capabilities and aspirations. Remember, Rome wasn't built in a day, and neither is a robust retirement nest egg. Take stock of your current financial situation, consult with a financial advisor if needed, and craft a plan that sets you up to succeed. By setting realistic goals, you're not only ensuring a comfortable retirement for yourself but also alleviating unnecessary stress along the way.

Diversify Your Investments

Diversifying your investments is a smart move when planning for pension and retirement as a tradesperson or any self-employed professional. 

While it might be tempting to focus solely on one asset, such as property or stocks, spreading your investments across different areas can mitigate risk and enhance long-term growth. By diversifying, you're safeguarding your current finances against any market volatility and unforeseen economic downturns. 

Think of it as having multiple tools in your toolbox - each serves a unique purpose and contributes to the overall success of the project. So, whether it's stocks, bonds, property, or even alternative assets, diversification is key to building a resilient retirement nest egg that can weather any storm!

Stay Informed

The world of finance can be a murky one, but ignorance is not bliss when it comes to your retirement. Staying informed about changes to pension laws, investment opportunities, and economic trends that could impact your retirement savings is key. Keep an eye on industry news, watch keynotes from relevant professionals, read up on business and personal tips from blogs (like this one!), and don't be afraid to seek advice from financial professionals if you need it.

Review and Adjust

Last but not least, remember that retirement planning is not a set-it-and-forget-it kind of deal. Life happens, circumstances change, and your retirement goals may evolve over time. Make it a habit to review your pension plan regularly - ideally at least once a year - and adjust your contributions and investment strategy as needed. Your future self will thank you for it!

Retire In Bliss, But For Now, Let's Sort Your Insurance.

So there you have it, a crash course in retirement planning that hopefully won't put you to sleep! With a bit of foresight, some smart financial decisions, and a healthy dose of elbow grease, you can build a retirement nest egg that'll have you living the good life long after you hang up your toolbelt. 

Just as important as your pension is your trade insurance. With Rhino, you're not just getting a quote - you're gaining access to tailored insurance policies designed specifically for the unique risks faced in your line of work. 

From liability coverage to tools and equipment protection, Rhino offers comprehensive policies that provide peace of mind. Get a quote with Rhino Trade Insurance today and safeguard your business against the unexpected - 0116 243 7904

About The Author Phil McCormick

Experienced in brand marketing and content. Most of that lovely communication you see online will be from Phil. social media, emails, videos, how to make a bacon sarny? You get the gist!

Trade most identified with: Electrician - It’s our Phil’s job to map out all our communications and make sure the signal works! Also, he’s one of the cockiest blighters in the team so electrician fits perfectly!

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