Reasons to save

We all have different reasons for saving but it's important that your money works hard and grows for you.

Ways to save – short-term or long-term?

It’s important to think about all your finances before making any decisions about saving. Look at your income, how much you spend each month and set yourself a budget.

Short-term savings

Saving for the short-term is with a specific goal in mind like a holiday, a new car or a wedding.

It’s also about having money to fall back on in an emergency. If your car needed some unexpected repairs, or you had to buy a new washing machine without warning, would you have the money to pay for it?

Many financial experts recommend having three to six months’ salary saved for these situations. So if you earn £1,000 a month, you should aim to save at least £3,000 in your emergency fund. However, we understand that this may not always be possible to save, with other commitments, but anything that can be put away could help you in an emergency.

Long-term savings

Long-term savings are most regularly used to provide for your retirement or a significant purchase.

Where to invest long-term depends on how long you need to save for, your attitude to investment risk and how accessible your savings will be.

Why save?

Whatever you want your future to be, saving is an important step towards a more secure and comfortable one. Unless your retirement is already on the horizon, you might not be able to picture what you’ll be doing in 20-40 years’ time. But it will come along – and much sooner than you think.

Our 2016 Retirement Report shows us that 47% of those in their 30s and 40s are either not saving enough or not at all.

By nature we are focused on the immediate – today, tomorrow, next month, or at a push, a year or two from now.

With this in mind could you live on just £159.55* each week? This is the maximum amount you could currently get from the State Pension. If this is less than you expected then you’ll probably need to save more to support your future.

* This is based on having at least 35 qualifying years’ of National Insurance Contributions (NICs).

One of the ways to do this is by saving into a pension, which is specifically designed for saving for your future. Here are some of the benefits:

  • A pension is a tax efficient way of saving for your retirement.
  • For every £80 you contribute to your pension plan, the Government will currently add an additional £20 if you are a basic rate taxpayer. If you are a higher or additional rate taxpayer, you may be able to claim additional tax relief via your annual tax return.
  • If you contribute to your company pension, your employer may also contribute. Any employer contributions may go up the more you save.
  • You have the flexibility to increase or decrease your pension contributions.
  • You have the option to invest your contributions in a number of different funds, depending on your attitude to investment risk.

The sooner you start contributing, the longer your pension has the opportunity to grow. It’s never too late to start a pension – especially when the taxman (and potentially your employer, if you’re paying into a company pension) is helping to pay for it.

Tax rules may change.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits (which isn't guaranteed and can go down as well as up). The value of your plan could fall below the amount(s) paid in.

Pay off debt or save?

What’s more important – paying off debt or saving towards your future?

It’s a tough question and there’s no right or wrong answer. You have to weigh up how much your debt is costing you versus potential growth of any savings during that time.

In reality, you may be able to pay off a bit of debt, while also saving some money for your future, which is why it is important to look at all your finances before making any decisions.


How much money should I be saving for retirement each month?

When you start saving for your future it's important to know how much money you need to save. This video looks at our recommended monthly contribution to help you towards a comfortable retirement.

Pension basics

Whatever stage of the retirement journey you’re at, get the basics before you go any further.

Find out more

Combine your pensions

Got more than one pension? Then you could think about putting them all in one place. Combining your pensions with Scottish Widows is simple and we won't charge you for this service.

Pension transfers

Got a question?

If you need to ask us a question about pensions or retirement, then get in touch. There are lots of ways to contact us.

Contact us