A potted summary of January market performance

  • The FTSE 100 ended the first month of 2024 down 0.75%
  • The US S&P 500 saw a gain of 2.17% for January 2024

Deep dive into performance from January and find out how this year’s elections might affect markets.

 

Market deep dive

 

Only 55% of self-employed people pay into a pension

In the latest impact report from Association of Independent Professionals and the Self-Employed (IPSE), it was found that almost half of self-employed people in the UK don’t contribute to a pension. With one in four employees considering a move from full-time employment to self-employment, this stat could be set to grow.

Interestingly, while only 55% of self-employed people contribute to a pension, a study from Workwell and IPSE shows that 75% of self-employed people save regularly into cash accounts

While interest rates on many cash accounts are very attractive right now, you may not see the same returns as you would with a pension when you get to retirement age. That’s because, unlike a cash account, a pension allows you to grow your money over the long term by investing in the stock market. By retirement, it’s possible that you’ll see much greater returns having contributed to a pension, rather than a cash savings account. 

On top of that, contributing to a personal pension is one of the most tax-efficient ways to save for your retirement. That’s all thanks to something called tax relief – whenever you save into your pension, you’ll get a 25% top up on your contributions from the government (essentially free money!).

It’s particularly important for self-employed people to consider saving into something like a personal pension, as they don’t benefit from a workplace pension and all the advantages that come with that, including employer contributions. And although most self-employed people will be eligible to receive the State Pension – which currently sits at just £10,600 per year – it’s likely that it would not be sufficient to support a moderate lifestyle at retirement.

 

Learn more about how self-employed people can build a pension.

 

Almost two thirds not on track for moderate retirement

New research shows that only 39% households in the UK are on track to achieve a moderate retirement income. While just 7 in 10 high earners are likely to reach the same target. According to the Retirement Living Standards set out by the Pension and Lifetime Savings Association (PLSA), a moderate standard of living is set at £31,300 per year for a single person and £43,100 per year for a couple. 

Additionally, only 30% high earners are on track to achieve a comfortable retirement – defined by the PLSA as requiring £43,100 as a single person and £59,000 as a couple, per year. Unsure how much you should be saving for life after work? Our handy Retirement Calculator uses a few details to figure out how much you need to save and how much money you could have for retirement.

 

Ready to start planning for retirement? Explore the Moneybox Pension below.

 

Explore the Moneybox Pension

 

As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Tax treatment depends on individual circumstances and is subject to change.