Self-employment is a great choice for many people, but you need to take steps to plan and save for your later life. You don’t get automatically enrolled into a workplace pension or have extra contributions paid in to your pension by an employer. It’s important to think about how you can get the retirement you want.
Get to know your State Pension
If you’re eligible then you can get your State Pension, which you can claim once you reach your State Pension age. It provides a foundation for you to build on for the income you will need in retirement.
Your State Pension is based on your own National Insurance record, which you build up by paying National Insurance contributions (Class 2 when you are self-employed). If you have been employed in the past, or received National Insurance credits, these will also count towards your State Pension.
The full amount of the new State Pension is £175.20 a week, which works out at around £9,100 a year – but not everyone will get this amount.
It’s important to check your State Pension online regularly. It will tell you the amount you’re predicted to get, and the date you’ll reach State Pension age under the current rules. When you get your forecast online, you can also check your National Insurance record too. This shows which tax years count towards your State Pension entitlement so far.
Having more for retirement
You might be focusing on the day to day needs of your business, but it’s really important to think about the future too. The State Pension is a good foundation for when you retire, but it might not give you the income you want on its own, so think carefully about contributing to a private pension or saving in some other way.
The Pensions Advisory Service have lots of information about your options. They can help you think about what you have saved already, how much you should try to put away, and the different ways to save.
You might already have one or more pension pots, perhaps a private pension or a workplace pension from a previous job. You may get annual statements to remind you how much you have saved. If you’ve lost track of a pension pot, then check your paperwork and try the Find a Pension Service to get up to date contact details.
This pension calculator from the Money Advice Service can help you understand how much you could get from your total pension pot.
We also have lots of information on this site about how to have more for your retirement.
Many of us are living longer. The time you spend in retirement could now be 30 years or more, depending on when you retire and how long you live. So it’s important to think about the retirement you want, and to plan for it.
You might want to slow down or do a different job in the future, or you might have caring responsibilities for someone you need to adapt to. Working in a different way can be a good bridge into retirement.
The Pensions Advisory Service offer a free mid-life review for self-employed people. This includes useful advice and support about your money, your work, your family and your health.