David and Michelle lead a comfortable lifestyle on their middle income salaries, they both drive nice modern cars, and they holiday abroad almost every year and enjoy social nights out with their wide network of friends. They live in a nice modern house on a nice housing development and like many couples of their age they have focussed on their mortgage as their number one priority and have put retirement savings on the back burner until they were more comfortable. But now as they near their forties they are beginning to realise that they have some catching up to do on the saving for retirement front.  Now obviously David and Michelle are just fictional characters but I dare say that we all know people like them we only have to look out the window or maybe even in the mirror!

In this situation there are a few things that people like David and Michelle should do as a priority;

1.       Stop Procrastinating – The sooner you start saving for the future the more you will have when you need it. If David and Michelle had even started putting even very small amounts away regularly in their twenties then they would be in a much stronger position now.

2.       Pay off the Mortgage – Look to get rid of debt as quickly as you possibly can – and don’t get anymore! Many modern mortgages have flexible features that will let you save interest by making extra payments without penalty – use them! In order to enjoy a fruitful retirement it’s essential that you create a gap before you retire when you have no mortgage so that you can make some serious saving and investing contributions.

3.       Get Free Money Off Your Boss – In the UK any company with more than five employees has to offer a work place pension scheme. An awful lot of employers will also pay extra money in to the scheme for you as an employer’s contribution when you join. If you are not in a scheme that your employer will add extra money to for you then you’re mad, you are basically accepting a pay cut!

4.       Avoid Aggressive Investing – Late starters are often tempted to go high risk with their pensions and investments in order to get great performance and catch up with where they should have been. High risk of course usually comes with potential high performance. A qualified adviser such as myself can help you put together a more sensible approach.

5.       Avoid Investing Too Conservatively – Late starters can also be very tempted to not take any risks at all and keep all their funds in cash accounts with the Bank. This is usually another mistake as the effect of inflation can be devastating on the purchase power of your money over time. And if you started late you really need to have better growth prospects than this if you don’t want to fall short of your goals.

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