5 credit card myths you shouldn’t believe
With challenger banking services such as Monzo and Revolut quickly making it onto the scene and...
An unexpected consequence of starting this role six months ago is that people now openly talk to me about money. It’s no longer taboo and, if anything, I now know too much: I know who has debt and how much, I know who has financial arguments in their relationship and who’s dependant on the bank of Mum and Dad. The list goes on.
The one money issue that stuck with me the most, however, was the amount of friends who’ve actually opted out of paying into their pensions: because they think the money is better put to use now, and pensions are something for when they’re older.
And then, while on holiday at Christmas, I saw this billboard…
“They say millennials are lazy. Retire early and prove them right.” – Prudential Financial billboard advert, I-95 highway PA, USA
After I finished laughing and had taken a picture to send to half a dozen of the aforementioned friends, I decided to run some numbers with This is Money’s saving calculator. I used a couple of fictional scenarios in an attempt to convince them to start saving for their retirement now.
Andrew likes the idea of retiring early – or at the very least comfortably – and he starts contributing to his retirement fund at age 23, contributing £200 a month. When he turns 30 he decides to raise his payments to £500 a month for the next 10 years, then effectively stopping any payments at age 40. Total contributions over the seventeen years: £76,800.
Assuming annual returns of 5%, at age 65 his pot could be worth £385,337.
Brooke thinks retirement planning is for when you’re ‘older’, so she starts putting away £500 a month once she turns 40. Total contributions over twenty-five years: £150,000.
Using the same assumptions, at age 65 her pot of money would be worth £297,755