A 40 year old earning £20,600 with qualifying earnings of £14,828, retiring at 68 (SPA) could build up a final pot worth £47,600, which could give them a basic retirement income of £2,710 a year. On top of the State Pension of £7,500 a year, this could be worth a total of £10,210 . (Contributions = 4% employee; 3% employer; 1% tax relief)
Want to top up your pot? Here are seven quick ways to save:
If they started now, a 30 year old could build up extra savings with a few small changes to their spending habits. For example:
Weekly, if you:
Each week you could save:
If you put this towards your pension you could build up [ii]:
Cut out one coffee shop coffee £2.80
£11,800 £14,800 £16,100
Had one less pint
£3.50 £3.80
Switched your mobile phone tariff [iii]
Cut out a packet of cigarettes £7.40
£31,400 £36,100
Worked out at home instead of paying for gym membership[iv] Cooked at home at least once instead of getting a take-away or eating out Brought a packed lunch to work every day
£8.50
£12
£50,900
£15
£63,700
About the research:
[i] The research was conducted by Opinium Research on behalf of NEST via online interviews with 2,028 UK retirees aged 40 to 75, between 17 and 20 March 2014. The sample is comprised of 144 40-59 year olds, 1,321 60-69 year olds and 563 70-75 year olds. [ii] These estimates are in today’s money, based on the size of retirement pot that might build up over the saving lifetime of a 22 year old planning to retire at 68. The outcomes are based on a member investing in the NEST Retirement Date Fund throughout their life and that this fund meets its stated ‘inflation-plus’ objectives.
[iii] Research from Billmonitor suggests three quarters of mobile phone users are wasting an average of nearly £200 a year because they are on the wrong contract.
[iv] Sainsbury’s carried out research which calculated the average cost of gym membership to be £442 a year.
The full report can be accessed through the CIPP news link below.
NEST Retirement Realities - Tomorrow's worth saving for - May 2014
Changes to the NEST system
4 June 2014
NEST has issued early communications about the next set of changes to their system, planned for implementation in September.
The NEST website contains with all the relevant information here .
CIPP Policy News Journal
08/04/2015, Page 441 of 521
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