Done with the Gym? Cutting out wasted direct debits could boost your retirement pot by £37k

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• As new year’s resolutions fade away, Standard Life analysis highlights how cutting out wasted direct debits could boost your retirement pot

The average Brit wastes £39 a month¹on direct debits they don’t want or use, and there could be a huge long-term benefit to cancelling them. New analysis from Standard Life, part of Phoenix Group, demonstrates how cutting out unnecessary monthly payments and redirecting them into a pension could give a pension pot a healthy boost.

The February Fade

People often start the year with good intentions and might try something new – whether that be signing up to the gym or taking out a subscription to fuel a new hobby. While almost half² of all adults say they make yearly resolutions, only about 10%2 manage to stick to them. Anyone that doesn’t cancel these monthly payments once they’ve stopped using them will see their outgoings add up over time – and this money could be better used elsewhere.

The potential wasted direct debit pension cost

Standard Life analysis finds that someone who began working with a salary of £25,000 a year and paid the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from the age of 22, could have a total retirement fund of £210,000 by the age of 68, allowing for 2% inflation over the period*. However, someone that redirected their wasted direct debits into a pension pot could boost it by £39 a month, also rising by 2% inflation each year, and build up a retirement fund of £247,000 by the age of 68 – £37,000 more, in today’s prices.

Total retirement fund at age of 68*
No additional contribution, saving from age 22	£39 a month additional contributions from age 22
£210,000	£247,000
	+£37,000

*assuming 3.50% salary growth per year, and 5% a year investment growth. Figures allow for 2% inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.

Mike Ambery, Managing Director for Workplace Pensions at Standard Life said:“If you’re approaching your morning workout with less enthusiasm this week, or you’ve given up on your 75 HARD, you’re not alone. The New Year is a great time to set goals and build new habits, but when living a busy life, things can easily slip and in the process, it can be easy to lose track of your monthly financial incomings and outgoings. It’s very easy to remain signed up to a service or membership that you no longer use and this wastage can really build over time.

“To avoid unnecessary expenses, it’s important to keep an eye on your regular payments and cancel old direct debits or outgoings that you no longer use. These extra funds can help with short term expenses or could give your long-term savings a boost. It’s amazing to see the impact that the average monthly wasted direct debit payment could have if you funnelled it towards a pension instead.”

ENDS
 

 

Enquiries

Notes to editors

[1] Wasted direct debits research

[2] Sticking to New Years resolutions research

*Calculations assume the following:

Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes. Figures allow for 2% inflation.

 

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples’ life savings for nearly 200 years
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
• Standard Life is part of Phoenix Group, the largest long-term savings and retirement business in the UK. We’re proud to be building on nearly 200 years of Standard Life heritage together
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.
• Standard Life is the proud headline sponsor of Race for Life, Cancer Research UK’s flagship fundraising event series.