£1m is a lot of money, but you don't need to save a huge amount of money on a monthly basis if you start early enough, according to experts
Carol Deveney had a corporate job for many years and built a lucrative pension pot from that – thanks to saving from her salary each month and benefiting from contributions from her employer.
Carol’s aim is to retire in about 10 to 15 years time, although to still take on smaller amounts of work. She is working with a financial planner to forecast for the next 25 years. The plan is to retire with an income of £80,000 a year originally, and to reduce this in her late seventies when she should not need so much. Carol would like to leave some to her son, aged 28.
Basic-rate tax relief on pension contributions is given automatically. Higher-rate taxpayers have to claim for further tax relief through a self-assessment tax return, unless their pension contributions are paid via salary sacrifice through an employer. These employer payments will reduce the cost to you even further. If your employer matches your contributions, you would pay just £132 on a £330-a-month contribution .Self-employed people do not benefit from employer contributions, but they still benefit from tax relief. It’s worth contributing to your pension to bring down yourFor example, you have a limited company and earn annual profit of £60,000 after costs and salary.
As an example: if you saved £80 a month, your overall contributions would total £9,600 after 10 years. But the overall value would be £15,592 with annual returns of 5 per cent.
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