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This investment tip can help boost your pension savings by 50% in 10 years


People can boost their pension savings by thousands of pounds by keeping their money invested until the age of 65, an expert has said.

According to data by Scottish Widdows, the average amount a customer withdraws by age 65 is £47,000.

Financial modelling by the insurance company shows that people can double their £47,000 savings by leaving it invested for longer.

The calculations show that, if the money stayed invested from age 55 (when the member would have first been able to take benefits) for an additional five years, they would have £13,925 more on average by the time they reach 60.

That figure rises to £24,661 if it were to stay invested for 10 years to age 65 – a rise of more than 50 percent; and to more than £38,000 if invested to age 70.

A separate analysis assumed members took the maximum tax-free cash of 25 percent (£11,750) at age 55. If the remaining £32,250 stayed invested, savers would be £10,441 better off after five years and £18,496 better off after 10 years.

Graeme Bold, workplace pensions director at Scottish Widows, commented: “Our data shows that the vast majority of people withdraw money from their workplace pension before reaching retirement age.

“Whilst early withdrawals are often an unavoidable necessity, draining a pension pot too soon can carry risks which both providers and retirees should be taking steps to guard against where possible.

“As an industry, it’s crucial that we better understand pension holders’ behaviour, so that we can help them save enough for a comfortable retirement.”

However, Mr Bold noted: “More needs to be done to encourage people to keep their pensions invested for as long as possible.”

The data from Scottish Widows shows more than three-quarters (78 percent) of retirees have already dipped into their pension pots by the time they retire.

Of the 78 percent who claim early, more than half (52 percent) withdraw funds five years before their Selected Retirement Age (SRA), with 21 percent opting to start taking out funds nine to 10 years before they retire.

Analysis of Scottish Widows workplace pension scheme customers’ behaviour, across 232,654 different retirement claim transactions between 2019 and 2023, revealed that only 20 percent wait until their SRA before drawing down on their pension.

Mr Bold continued: “It’s up to pension providers to have the support in place for people through a lifetime of investment – before, during and after they reach retirement age.

“The pensions landscape is ever-changing – people are living longer which means pensions must cover longer retirements, and more people are choosing to phase into retirement with part-time work.

“Therefore, it’s essential that pensions are flexible enough to be fit for purpose in today’s world.”

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