Shake it up – save a bit more
It can be tricky to find that little bit extra to save, especially with so many things competing for a share of your finances.
The Power of One: how a contribution increase of just 1% per year can impact your pension savings.
However, it’s worth noting that a small increase now to the amount you pay into your pension account could have a real impact on the amount you will receive when you don’t work anymore.
Let’s call it ‘The Power of One’; how a contribution increase of just 1% a year can impact your pension savings. Sometimes you just need a little nudge to pay a bit more.
Automatically increasing contributions by a small amount every year is called ‘auto-escalation’. It applies to your contributions only and can be timed with salary increases so you don’t really notice a difference in the amount you take home each month.
Want to know how it works in real numbers?
Take a look at Jack and John, they’re both 22, each paying 3%, but Jack doesn’t increase his payments, whereas John adds a 1% increase each year from age 30 to age 37. You’ll notice there is a difference between the large numbers in the pictures below which shows the total pot value for each person.
This 1% increase could be the difference between a football season ticket in the standard seats and a season ticket in the hospitality area.