STASHING enough money away for your retirement can seem like a daunting task – but you could save up a million pounds with some simple changes.
The cost of living has soared for millions and putting away a bit of extra cash every month might be the last thing on your mind.
The key thing you need to remember is that you must have a decent income to be able to achieve this goal.
But some of the tricks that people will use to become pension millionaires are useful to those on lower wages, because it will help boost their pension pots.
The Sun spoke to Romi Savova, chief executive of PensionBee, who offered four of her top tips for building up a sizeable nest egg.
It comes after The Sun revealed the exact amount you would need to save depending on your age to retire a millionaire.
How much would you have to save to become a pension millionaire
In order to save up over 1million pounds for retirement you need to start saving early and have a decent income.
The figures in the table above give you an idea of how much you would need to save.
For example, if you’re aged 25 that means you have 43 years until the government retirement age of 68.
In order to hit the £1million mark you’d need to tuck away £258 a month into a pension. That means you need to be earning between £30,000 and £45,000 per year.
It also assumes a stock market return of 5% as well as annual management fees of 0.5% and a minimum workplace contribution of 8%.
This might not be achievable for some, for example, you may not be earning enough or you may choose to prioritise saving for a house over paying into your pensions.
But it does show how investing in your retirement pot now can add up, so you can have a more comfortable retirement.
Start out by working out how much you’ll need in retirement to be comfortable and work backwards. You should also assume that your salary will increase and you will be able to stash away more cash as you get older.
Calculators, such as this one from Money Helper, are a good way to work out how much you need to save now.
Check if your employer will match your contributions
Under what’s known as auto-enrolment, companies have to put eligible staff into a workplace pension.
Bosses have to contribute a minimum of 3% of an employees monthly earnings to the pension pot.
And an employee usually pays 5% to meet the 8% minimum required between the two of you.
But some bosses are willing to match your contributions if you put in more of your salary each month.
And the amount they contribute isn’t taxed nor does it have National Insurance deducted from it.
In essence, it’s extra free money from your employer to boost your pension.
It’s worth checking with your employer if they’re willing to do this as it could help you put away hundreds or thousands of pounds extra a year.
Romi said: “Contribution matching can help savers build their retirement savings faster, so it’s always worth asking the question.”
To be eligible for auto-enrolment you have to be between 22 and state pension age, currently 66, and working in the UK.
Plus, you must be earning over £10,000 a year.
Make the most of tax relief
Many people have personal pensions on top of making workplace and state pension contributions.
Basic rate taxpayers, so those earning between £12,571 and £50,270, usually get tax relief from the government on their personal pension contributions.
This means HMRC adds a percentage of your contribution to your pot, and it’s not taxed.
But higher and additional rate taxpayers can in fact claim extra tax relief.
You’re on a higher tax rate if you earn between £50,271 to £150,000.
Anyone earning over £150,000 is in the additional rate taxpayer bracket.
It’s 25% for the higher tax rate and 31% for the additional rate.
You can claim the extra tax relief through the HMRC website or your self-assessment tax return.
But bear in mind it won’t be done automatically for you.
Romi said: “By utilising all available tax relief, savers can help boost the value of their pension, without having to increase their contributions.”
Check your state pension entitlement
You can use your state pension alongside personal and workplace pension savings to pay for retirement.
However, not everyone is entitled to the same amount of help from the government.
Currently, all workers need to have paid National Insurance Contributions (NICs) for at least 10 years to qualify for the basic state pension.
To receive the full amount of £185.15 per week, you will need to have paid NICs for at least 35 years.
But you can fill gaps in your NI record which means you can make yourself eligible for the higher payment later on.
Romi said: “In some cases, savers that have gaps in their National Insurance record may be able to make voluntary contributions to fill these in and qualify for the full state pension.”
You can check what you’re state pension entitlement is by going on the government’s website.
There you can find out how much state pension you’re entitled to, when you can get it and how to increase it.
Let it grow, let it grow, let it grow
It might be tempting to dip into your personal pension pot once you reach the age of 55, when you are allowed to access the cash, but leaving it be will let it grow into a more sizeable chunk.
Personal pensions grow based on what’s known as compound interest – when the money you stash away builds interest.
You can make money on investment returns too.
This is when your pension provider might choose to invest your pension in stocks, bonds, real estate, other assets.
But you can lose money as well as gain extra money depending on how risky the pension plan you’ve chosen is.
Your state pension will increase by the equivalent of 1% for every nine weeks you defer after reaching state pension age too.
So if you deferred receiving it for 52 weeks, your weekly payments would be worth £10.70 extra.
Romi said: “Even delaying the receipt of the state pension by just a few weeks could result in a higher weekly state pension amount or even a lump sum payment.”
In other news, Martin Lewis has revealed how he helped a saver boost their pension pot by over £2,500 a year.
Plus, a pensions expert has urged women to check for a simple mistake that could leave them thousands of pounds out of pocket.
