Pension: You could boost retirement savings by up to £37,483 – ‘simple to do!’

Expert reveals tips on how to save for retirement

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Pension saving can be challenging, but diligence is key to achieving a sizeable pot for later life. Many are reliant on this sum and the state pension for their retirement, and therefore the more money a person puts aside, the better off they are likely to be. New analysis has shown how Britons may be able to give their savings a helping hand, and the action centres around Christmas.

PensionBee, an online pension provider, has found if Britons diverted half the money they are forecast to spend this Christmas into a pension, they could be as much as £1,442 better off by the time they reach retirement.

However, this amount could increase to a staggering £37,483 for individuals with the longest retirement horizon.

This would occur if they carried on paying the same Christmas bonus into their pension until they retired at 65.

A study by Statistics showed average spending per head during Christmas 2021 is set to reach an average £1,131 across the UK.

If people were to save a quarter of the average amount predicted into their pension instead, they could add between £423 and £721 to savings.

This is, of course, dependent on how far off a person actually is from their retirement.

If a person manages to cut back even more, only spending half the amount forecasted for Christmas, they could make a saving of £566 into their pension.

Once again, depending on time left until retirement, this could mean an ultimate boost of between £846 and £1,442.

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Starting at the age of 25, or even earlier, provides the most opportunity for pensions to build up via compound interest.

Making the same level of additional contributions ever Christmas, at a level fo £566 could mean individuals are better off by over £37,000 when reaching retirement.

Those currently in their mid-50s can even stand to benefit should they take action now.

The PensionBee analysis showed an annual extra contribution of £283 for people of this age could raise an extra £3,821 towards a retirement fund.

This would rise to £7,482 for those willing to slash back more on a Christmas spend for the sake of their pension.

The benefit comes from the idea of compound interest – where a person earns interest on what they save, as well as interest on the interest itself. 

It essentially means a person’s savings will snowball over time, leaving them better off in the long-run.

Romi Savova, CEO at PensionBee, commented on the matter.

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She said: “With Christmas fast approaching I would urge savers to think about how much they are spending on festivities, and whether any of that money could be redirected towards their pension instead.

“The power of compound interest can have a significant impact on the total pension pot they retire with. 

“Paying a Christmas bonus into your pension via a lump-sum payment is simple to do, and your future self will thank you greatly.”

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