Want to boost your pension? Cut some luxuries

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21 May, 2014

Want to boost your pension? Cut some luxuries

For most young people, saving for a pension seems like an intangible goal. Where do I start? How much should I save? How do I do this? Before panic sets in, what most need to realise it that the saying ‘look after the pennies’ stands true.

According to a new report by the National Employment Savings Trust (Nest), small alterations in spending habits such as making some cut backs with pub visits, coffee shop outings and eating out could help younger workers build up a lump sum worth thousands of pounds for their pension.

Taking a packed lunch to work instead of buying one every day could add a £225,000 lump sum to your pension savings. Choosing to exercise at home instead of paying out a gym membership could get you about the same. Add another £26,600 by drinking one less pint a week or by making one less trip to the coffee shop.

Starting early is always best. An employee who starts saving at 22 should be able to double the amount of income they receive from a state pension by the time they reach retirement, even if they only put in the minimum level of contributions to a pension scheme.