Hannah Martin did not even start thinking about a pension until her late 40s. She says it is never too late to make provisions for retirement
Hannah Martin spent a large chunk of her career self-employed and admitted she did not even start saving for retirement until her late 40s – but now she has a pension pot of almost half a million pounds.
Hannah, 53, told The i Paper how she did not see pensions as a priority when she was younger. When she became a mother, it became even more difficult to have spare cash.
As a result, she did not even start saving into a pension until the age of 47 – but she has turned it all around and now has a sizeable £460,000 pension pot which she is adding to all the time to ensure a comfortable retirement.
She has only been able to do this as she started a very successful business, and put large amounts of her income into her retirement pot over six years.
But, she says it shows anyone can start saving for a pot later into their career, even if they did not earlier on.
The mum-of-two, who lives in Shoreham-by-Sea in West Sussex, said: “Too many people – especially women – think they have left it too late when it comes to pensions, so they feel it’s not worth doing anything. But it is.
“What I would say to women is, with the power of compound interest, even if you can save £10 a month or £50 a month, that will grow and it is much better than nothing.”
Hannah is sharing her story with The i Paper as new figures released today show more than a third of women (36 per cent) face poverty in retirement.
Women are 12 times more likely than men to take a career break to raise children – leading to a loss of income and gaps in their pension contributions, according to Scottish Widows’ latest Women and Retirement report.
The research reveals that more than half (58 per cent) of women at or near retirement have taken a career break compared to just 12 per cent of men.
This year, Scottish Widows has calculated that the total median private pension for women at retirement is £173,000, while for men it is £286,000 – meaning a gender pension gap between women and men of £113,000. This is an increase since last year’s gender gap of £100,000.
Hannah worked as a copywriter for an agency, but ended up going freelance after having her daughter at the age of 37.
“I remember when I was in my early 20s speaking to a financial advisor and they showed me a graph highlighting how if you started investing in your pension from a younger age, you would put less in overall and get more at the end – obviously with compound interest,” she said.
“Although I got the concept of it, when you are in your 20s, retirement seems so far away and you are always saving for rent or a mortgage or to have a family and there never seems to be any spare money.”
Hannah Martin says that when she was in her 20s, retirement seemed so far away (Photo: Charlotte Rebecca Photography)
Prior to going freelance, Hannah was working in London and had a two-hour commute from her home in Worthing. So, she decided to work as a freelance copywriter from home.
She said: “At this point, I had two kids and money was always spoken for and there was nothing left over. I didn’t really think about pensions as they weren’t on my radar.
“Retirement felt a really long way off and you are so self-sufficient and there is always money because you are good at going out and earning it and then living according to the means that you have.
“You assume that will always be the case and don’t stop to consider that at some point, you either can’t or won’t want to work – and then you’ll just have the state pension which is not enough to live on.”
Hannah admits that she was heading into pension poverty as she had not made any provisions for retirement.
How she turned it around from 47
When she was 40, she started a website called Talented Ladies Club targeting issues affecting ambitious career women with children who were trying to make their careers work.
She ran it alongside her freelance work and when the website became financially successful, she was able to stop freelancing.
She initially started paying into a pension around the age of 47 to reduce her tax bill, after getting guidance from her accountant.
You get tax relief on a pension at your marginal income tax rate up to an annual allowance that currently sits at £60,000 per year.
You can also carry forward unused allowance from the previous three tax years to the current one, as long as you were a member of a pension scheme during those years.
Hannah used her full allowance in each of the years, plus the carry forward allowance. She also benefitted from large investment growth on her pot, to take her to her total figure of £460,000.
She added: “A friend told me that you needed a minimum of £250,000 in your pension pot, but ideally £500,000 for a good retirement. I thought that sounded like a ridiculously high amount of money and I was so far off that as I hadn’t started saving anything at that stage for my retirement.”
Hannah Martin says she was heading towards pension poverty until she turned things around (Photo: Charlotte Rebecca Photography)
“I was used to living frugally during the lean freelance years, so as the company started making money, I thought I’d put as much money as I could into my pension rather than take it out and get taxed on it as income.
“If I hadn’t turned things around, I would definitely have been heading for pension poverty and a lot of my friends are,” she said.
Hannah, who last month launched a website called Rich Retiree, now has a pension pot of £460,000.
Although she knows she is in the rare position of having a successful business allowing her to boost her pension, she wants women to know it is never too late to start saving for the future.
She said: “I am fortunate that there is money in the business and I needed to play catch up so I was taking the least I could out of the company and putting as much as I could into my pension.
“I think there is a lack of financial education and confidence in women. A lot of women maybe assume their husband has got that side of things sorted. But maybe he hasn’t or maybe their marriage won’t last. It is a dangerous assumption that relying on someone else is going to be enough.”
Although Hannah is married to her husband who she has been with since 2007, it is a second marriage for both of them and she says they are both financially independent.
She added: “I know I have been really fortunate and I recognise that and it is really satisfying that I have been able to make this huge stride in my pension pot.
“But anyone can start building their pension pot and it is never too late and even starting with a small amount can make a huge difference in the end.”