Investment Goals

How to save for retirement

Updated: 19 November 2020

Jasmine Birtles is a TV and newspaper journalist and personal finance expert. In her articles she’ll be helping you get the most from your investment and reach your personal goals.  

Retirement seems so far away and there are so many other demands on your income that it’s easy to put it off.

However, the good news about investing for retirement is that even small amounts that are put away now can grow to an impressive pile once you decide to slow down a bit.

The aim is to amass a pot of money that is big enough for you to live on for a few decades (you should expect to have a retirement of at least 20 years, if not considerably longer). How you collect up this pot of money is up to you. Pensions are often a good way to do this – particularly because of the tax saving while you work – but it’s not the only way.

Here are a few ways to save for retirement without having to think too much about it!

Make the most of your workplace pension

This is a lovely easy one because if you are an employee – even if you work privately, say as a nanny or carer – you should automatically be enrolled in a workplace pension. According to the new rules, you should be paying 5% of your income into it and, crucially, your employer will also have to pay 3% extra on top of that. So that’s free money from your employer! Not only that, because it’s a pension, the rules say that the Government has to add in the tax you would have paid on that money. So from the start your pot has grown.

Consider setting up your own pension

If you’re self-employed then you will need to be responsible for sorting out your own pension, if you want one.

Personal pensions used to be expensive (in terms of the management fees) and generally poor-performing. Nowadays though they are forced to charge a lower management fee, so you have as good a chance of the pot growing as you would if you had a workplace pension. The only downside is that you don’t have an employer adding to your pot.

As a self-employed person you could consider investing in:

  • Stakeholder pension (the maximum management fee they can charge is 1.5%)
  • Self-invested Personal Pension (SiPP) where you decide what to invest your money in
  • NEST pension (National Employment Savings Trust)

Use your ISA allowance

While pensions have the advantage of tax put in at the start, when you come to retire and live off your pension you will need to pay tax on that income. However, with ISAs it’s the other way round. You pay into an ISA out of your taxed income, then you’re not taxed on the gains you make and when you take it out at the end you get it all tax-free.

However, if you’re using your ISA as part of your retirement savings (and that’s the right thing to do with it, by the way) then you should be putting money in an Innovative Finance or Stocks & Shares ISA. These do better than a Cash ISA in the long-term. Take a look at Index-Tracking Funds (more in this article on as they are a cheap and easy way to invest in the stock market and you can get them wrapped in an ISA.

Get creative about retirement savings

There’s absolutely no law that says you have to invest in pensions or even stock market products for your retirement. Frankly all sorts of different things could set you up for your golden years.  The ideal is to have money in a range of products including pensions, ISAs and, ideally, other investments too.

Other things you could invest in include:

  • Property (either in the UK or abroad)
  • Online lending such as Funding Circle
  • Collections (like art, jewellery, classic cars, Elvis memorabilia, plastic action figures and more!)
  • Gold, silver and other precious metals.

Really, any of these could help you save for retirement. They all have pros and cons and it depends on your likes and your lifestyle which you would go for.

For example, with online lending you can support UK businesses and help the economy grow as well as your nest egg.

Property is usually a good investment long-term, although there are a lot of costs involved in maintaining it and you’re never sure if the price will go up, particularly if you buy abroad. Gold and silver are good ‘safe havens’ when we go through economic uncertainty. It’s worth having some of that if you can do it.

Collections on the other hand can sometimes grow exponentially in value – some Lego sets go up by 1000’s of per cent over a few years. Collections can be very lucrative if you get it right, but it’s more of a gamble. Some people have managed to fund a new conservatory by selling their collection of designer clothes. Others have lived well by selling good art they invested in early. However, you can never know if a particular collection will keep its value. For example, right now posh dinner services which might have fetched thousands a few years ago are hard to shift, and beautifully carved, heavy wooden furniture can barely be given away. So collections should be used as an extra to your core investments only.

For more information

To find out more about the Funding Circle ISA visit

By lending to businesses your capital is at risk. The tax-free entitlement of an ISA depends on your individual circumstances and may change. Not covered by the Financial Services Compensation Scheme.

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

The information and views contained here are provided solely for informational purposes and should not be construed as legal, tax, regulatory, accounting or investment advice, or as a recommendation or an offer or invitation by Funding Circle.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here.

If you have any questions, please speak to your professional adviser or seek independent specialist advice.

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