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17 Jan 2018

Fewer every-day luxuries could add up to thousands of pounds in retirement

Cutting back on ‘little luxuries´ could give people thousands of pounds more every year in retirement income, according to research from Scottish Widows.

The company claims that the average person in the UK spends £124 each month on incidental spending like takeaways, taxis, ready meals and buying clothes that are hardly worn. Yet at the same time, almost a third (32%) of people say they simply cannot afford to save any more than they already do.

Saving that £124 per month into a pension, with a matching contribution from your employer, could provide as much as £9,853 in additional annual income in retirement, Scottish Widows calculates.

Many people don´t realise quite how much their spending on every-day luxuries adds up. The research shows that most people underestimate how much they spend on little luxuries by £74 a month, while one in nine (12%) admit to not tracking their extra spending at all and having no idea how much they could be splashing out on non-essentials.

Commenting on the study, Robert Cochran, retirement expert at Scottish Widows, said: “January is traditionally a time when we set out to improve our financial habits for the year ahead and while it would be unrealistic to suggest we live entirely without little luxuries, there is an important message about the need to ensure untracked spending today doesn´t harm our financial security tomorrow.

“Our Retirement Report shows almost 23 million people are failing to save adequately for retirement, and so there is no time like the present to make the first step towards positive change. It can also help build a longer term saving habit and make a real difference to quality of life in retirement.”

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