Last week (3 Oct 2019), female pensions campaigners lost a significant legal case against the governments intentions to continue to raise the age of retirement for women. The retirement age rose from 60 to 65 and is set to continue to increase to 66 by 2020 and 67 by 2028. This has resulted in many people close to retirement, receiving their pensions later than expected, leaving many in financial difficulty.
Whilst MPs have been bombarded with complaints and been lobbied for greater awareness, the unfortunate fact is that this is an issue that is simply going to affect more and more.
Although the age of state pension has risen recently for both men and women, according to studies, women are particularly vulnerable to the effects of the changes and often have up to £100,000 less in their private pensions, compared to their male counterparts.
So, what to do about it? Clearly, it’s not possible for people to go back to work and pay more into a private pension, but it is possible for those coming up to retirement age, as well as for those for whom retirement seems eons away, to start building a passive income to add to and bolster their monthly income both now or for retirement.
With the ever-rising age of retirement, it is no longer feasible for those saving for retirement to simply stick their savings in a savings account or just simply rely on your private pension working as efficiently for you as possible. More and more people are now deciding to take a more proactive approach to managing their income for retirement. Whilst it’s not possible for you to access your state pension until a certain age you can access some or all of your private pension and decide to invest it in order to further bolster their pension.
P2P lending is one of the many ways you can choose to help grow your pension pot, make the gap between retirement and state pension age less painful and just make what should be your ‘golden years’, a little more golden.
P2P lending allows you to lend to businesses for an agreed rate of interest. On rebuildingsociety.com you can choose a hands-off, passive approach to investing by making use of our auto lending option BidPal or you can manage your investments manually by picking and choosing the businesses you want to invest in. If you choose to invest manually this will require a few hours a day, up to about 6 -8 hours a week to do you due diligence and to manage your investments on the platform. Regardless of the method you choose, P2P lending will help you to make your money work that bit harder.
Of course, investing is not the same as saving, with investing comes risk, but also reward. To help mitigate the risk exposure, we’ve introduced the BuyBack Guarantee (BBG). The BBG will allow you to invest but carry less of the risk. You can buy loan parts with a BBG attached on the secondary market, if the loan falls into arrears or defaults the selling lender will buy back the loan part from you, reducing your exposure to capital loss. The trade off? You’ll earn slightly less (4-8%) on the loans rather as the seller will sell the part at a premium for the promise of re-buying it if things go wrong. As you get used to the concept of P2P lending and managing your portfolio you should potentially consider having much of your portfolio as BBG loans, and once you get more comfortable with the platform, you can choose to take on a higher level of risk.
Starting early with a pension saving / investment plan is obviously the best solution to addressing the ever-increasing pension age and cost of living. However, it’s never too late to start.
Hear from one of our long-term investors on rebuildingsociety.com Michael, who started lending to earn a passive income. His only regret? - That he didn’t start sooner!
Understand the Risks
Lending to businesses carries the risk of default. If a business defaults you could lose your capital and unpaid interest.
