People choosing to retire two years later than minimum pension age could net an extra £22,000
While many people aspire to retire as early in life as possible, the additional savings you can make during the latter years of a career can have a positive impact on the size of your pension pot. New analysis by Standard Life demonstrates how working for an extra couple of years - when a combination of peak earnings, higher pension contributions and compound interest can have a greater impact - could significantly boost your retirement income.
Potential financial impact of the increase in minimum pension age from 55 to 57 The following calculations are for illustration purposes and are not guaranteed pension sums due to the number of variables involved. By building a pension over time and leaving it to grow, compound interest will build each year too. So, towards the end of your career your pot is likely to be larger.
Also, a couple of extra years could buy some extra time for savers whose pots have been hit by recent volatile markets, and who might be worrying about the increased cost of retirement during a period of high inflation. Those who continue paying into their pension right up to 66 could add a further £140,000 taking their total pension pot to £311,000.
She continued: “For those in a position to do so, consistently paying into a pension from as early an age as possible can make a massive difference over time, and as our analysis shows, the biggest impact can happen towards the end of your working life. Ms Holt added that the Retirement Living Standards tool from the Pensions and Lifetime Savings Association is a great place to start, clearly showing what life in retirement looks like at three different levels:
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