It is very understandable that you do not yet fully know how a pension works. And then comes the question of how you would like to build it. Various options are possible, such as building up savings yourself or outsourcing it to a pension fund. iBilly explains in this article when you can best start building and which options you can choose from.
When to save for retirement?
It is difficult to say exactly when it is best to start saving for retirement. Many have started working through part-time jobs. The employer in question may have been registered with a pension fund, so you had already started accruing without noticing. Saving for pension through a fund is done as follows: you accrue pension every year on a part of the gross salary that you earned in that year. This amounts to approximately 1.37% pension contribution annually.
It is smart to start building up your pension around your 25th birthday. This gives you a greater chance that you will have accrued sufficient pension when you have reached retirement age. Pension funds use a term of 35 to 40 years in this regard. There are of course also differences in whether you work full-time or part-time. There are several options for saving for your retirement in terms of investing.
How to save for retirement?
When saving for retirement, you are free to choose what you prefer. The three best-known ways are: putting the money in a bank savings account, saving money through a pension fund or investment account. The advantage of a savings account is that it is much more accessible. You can always access your saved money. So if you were to retire earlier, you can already use it. If you prefer to invest your money in a retirement account, this often yields a higher return than a savings account. In general, pension funds make an average annual return of 6 to 7 percent. The advantage of an investment account is also the benefit of a higher return. You can invest in various ways, such as in shares or real estate. The market is unpredictable, but real estate generally increases in value. So it is just what you prefer. It always remains a risk, however you want to save for retirement.
iBilly: manage your pension money now
As soon as you choose to save your pension through a bank savings account, or by investing, you would do well to set your money aside. With the ‘savings goals’ option in the iBilly app you can create a pot so that you can always easily view your saved pension money! In addition, you can use the iBilly app daily to view your income and expenses. Are you taking the plunge today to be in charge of your money? Try the iBilly app for free!
Would you like to get started with our handy app? Download the iBilly app for free and start managing your income and expenses right away. If you want to use extra functions, you can choose one of our subscriptions. Do you have some questions for us? Feel free to contact our customer service so we can help you.