Putting Off Retirement Can Add £50,000 To Your Pension

If you are considering taking an early retirement, then think again – working an extra few years could put almost an extra £50,000 into your pension pot.

Financial experts have calculated that by working for an extra five years could add up to £46,388 to pension savings.

That’s the difference between a retirement income of £457 a month and £771.

The extra money comes from a 65 year old staying at work and maintaining workplace pension contributions until they retire at the age of 70.

The good news is, even if you do not fancy the extra five years of toil, working three years still lifts a pension pot by a massive £25,542.

More over 65s at work

The research was by pensions giant Aegon.

The company found that the average monthly payment into a pension was £355, giving a retirement fund of 3105,496 at 65 years old.

By keeping contributions at the same level, this increased the fund to £131,038 for a 68 year old and £151,884 for a 70 year old.

The research revealed that the way people view retirement is changing.

The number of over 65s still at work has doubled from just under 5% to 10.2% according to official figures, said the company.

Lifestyle choices

Steven Cameron, Pensions Director at Aegon said: “Those of working age today are waking up to the likelihood they’ll not retire at as early an age as their parents, and are no longer picturing state pension age as the defining ‘retirement moment’ at which they automatically leave the workforce. For some, the decision to work on past ‘traditional’ retirement age will be a lifestyle choice, but for others an inadequate pension pot may make it a necessity.

“The positive news or silver lining as some may see it, is that working a few years longer and keeping saving in a pension can dramatically improve retirement incomes.

“An individual with an average retirement pot making the average level of contributions could see their private or workplace pension income increase by two thirds if they defer retirement for five years. This is a result of the triple boost of continued investment growth on the pension fund, further contributions being added and ultimately fewer years to spread the fund over once no longer working.”

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