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Self-employed business owners face many challenges and retirement planning can be even more complicated, as there is no one to organise a pension for you and no employer making contributions on your behalf. On top of that, self-employed workers often don’t have a regular income, so many will focus on setting aside money as a safety net if they cannot work.

New research shows [1] that some self-employed workers are heading towards a pension saving crisis as they cannot afford to save for their retirement.

Less comfortable retirement

The nationwide study found more than two fifths (43%) of those working for themselves admit they do not have a pension, compared to just 4% of those in employment – a key reason is that 36% of the self-employed say they cannot afford to save for retirement.

Self-employed workers now make up 15.1% of the UK workforce, with more than 4.8 million people working for themselves [2], but the research found they are heading for a less comfortable retirement with many not planning to stop work.

Day-to-day emergencies

Around one in three (31%) say they will be relying entirely on the State Pension to fund their retirement, while 28% will be reliant on their business to provide the income they need.

Self-employed workers are savers, but the research found they are more focused on day-to-day emergencies than the long term of retirement. Two thirds (64%) of the self-employed save to build up a safety net in case of an emergency, in comparison with 57% of those in employment.

More complex requirements

Just one in ten self-employed people receive professional advice from a financial adviser regularly, despite having potentially more complex requirements than someone in employment. One in five (19%) are not confident with money and financial matters, while a quarter (24%) worry that they do not know enough about money.

All this adds up to an advice gap when it comes to the importance of pensions for the self-employed, as 20% admit they do not take pension saving seriously as they do not think it applies to them.

No one wants to work forever

Saving for a pension is still important, as no one wants to work forever. And no matter what your employment status, having money to fund your retirement is essential, as the State Pension is unlikely to be enough to fund a comfortable retirement.

The earlier you start contributing to a pension, the bigger your retirement pot should eventually be, as your money will have a longer chance to grow, and you will have paid more in over a longer period. The more you can save, the greater the chance you will enjoy a financially comfortable retirement when you stop work.

Source data:
[1] Consumer Intelligence conducted an independent online survey for Prudential between 20 and 21 June 2018 among 1,178 UK adults

If you have any questions regarding this article then please contact Cornerstone Partner and Chartered Financial Planner, Simon Wigglesworth.

Simon Wigglesworth


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