AVIVA released a lot of research this month into the retirement planning habits of the UK. In case you immediately want to stop reading because you are translating this to mean pensions; the answer is – not necessarily!
When it comes to retirement you just need to have enough assets to live off for the rest of your life. It’s just the government have made pensions appealing to people planning their retirement by offering tax incentives.
Here are some of the main facts from the AVIVA report:
- We reach our “peak earnings” on average at 51
- It you save an extra £100 during the 5.5 years of peak earnings, this could boost your retirement pot by £25,000
- 33 is the average age to start saving into a private pension
- 39 is when we start to take retirement planning seriously
- Yet it still takes people to age 45 to work out what they actually need for a comfortable retirement
- Almost half of people are relying on an inheritance or downsizing to retire
This is scary!!!!
Are you above or below average?
So, something to think about…………..
If I am 20 and set aside £100 gross per month until I am 30 and then don’t pay anymore in again. How much will I have at 60 if investments grow on average by 5% net each year?
How much will I have if I am 60 and pay in £100 per month between 40-60?
The answer to the person who invests only £12,000 between age 20-30 is £69.376.16
The answer to the person who invests a total of £24,000 between 40-60 is £41,103.37.
So the person who has saved twice as much has less!!
The moral of the story is not to procrastinate, but to let compounding be your friend and to start as soon as possible.
Lots of Love
Miss Lolly xxprevious post: New Years Resolutions next post: Hey Big Spender!