Could increasing your ongoing contributions by only 1% significantly increase your retirement savings?
If you increase your pensions from 3% to 4% for example, your pension pot could be worth as much as 33% more by the time you retire (This is Money, December 2017).
There are many factors that will make a difference to your eventual pension pot, including the age you start saving and the amount you contribute each month, however, upping your contributions will have a multiplying effect on the growth of your savings.
Someone who begins saving £800 per month at the age of 20, will have a pot worth £46,000 more at retirement than if they had saved £600 per month instead (This is Money, December 2017).
A small increase in contributions having a large effect on final values is due to the benefits of compound interest. Basically, the earlier you invest your money the more benefit you will receive from your original contributions and your growth on top.
It's important however, to ensure that your pension policy is suitable for you and matches your needs and goals. Remember, saving a small amount each month in the present, could make a huge difference towards your standard of living in retirement.
Contact Westminster Wealth Management today and one of our skilled advisers can construct a financial plan for you that will enable you to meet your financial goals.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Will it REALLY improve my retirement if I increase my pension contributions by 1% - or should I just enjoy the money now?