In the week that we saw the Spice Girls headlining at Wembley Stadium, new figures were released by the Department for Work and Pensions (DWP) revealing that, a staggering 87% of people were saving into a workplace pension in 2018. This is a huge increase from 2012, where only a little over half (55%) of people were setting aside money for their future.
Auto enrolment is doing a great job of getting people on the savings ladder but if we delve a little deeper into the data, it’s clear that although more people are saving, the average amount saved has declined sharply from just over £6,000 in 2012 to £3,616 in 2018. This fall is due to a huge rise in people just contributing the statutory minimums.
For the majority of people, auto enrolment minimum contributions won’t be enough to give them the retirement that they really want. So, what can you do to make sure your retirement is something to look forward to, rather than something to be endured?
Tips to saving, if you “Wannabe” a happy retiree
1. See if your employer offers a more generous pension
Many employers pay more than the minimum or match employees’ pension contributions, so it always pays to ask what’s on offer.
Remember, employer contributions are essentially “free” money that you couldn’t get any other way. You may also benefit from tax relief.
2. Pay in more yourself
Think about whether you could afford to put a little more into your workplace pension each month yourself. For somebody earning £28,500 a year, an extra £10 a month could mean an additional £13,060 in their fund after 40 years. This infographic explains how.
You can increase your contributions by logging into your online member account and opting to make an Additional Voluntary Contribution (AVC)– or speak to your employer.
3. Start early save savvy
The sooner you start saving, the longer your money has to grow. Here’s a great video which explains the wonder that is compound interest. You will be automatically enrolled from the age of 22 but if you start work before then you can always ‘Opt In’. The sooner you start saving the longer you are giving your savings to grow.
4. Property as your pension?
If you are fortunate enough to own a home, it can be tempting to think that downsizing in the future could be the ticket to a happy retirement.
But, downsizing in older age is not always as easy as it sounds. A house half in size will not necessarily be half the price if you want to stay in the same area. Indeed, you might not be able to sell your property at the time and at the price that you need.
Put simply; the earlier you start, the more you put in and the more you’ll get out.