Nearly £37,000 could be unlocked for retirement, with millions of Britons without even realising. A simple change to your money management could contribute to a significant boost, experts say. Cancelling forgotten direct debits and redirecting the money into a pension could dramatically boost savings for later life. New analysis from Standard Life showed that on average, Brits waste £39 a month on unused direct debits. Over time, this can seriously add up.
Someone who starts work at 22 on a £25,000 salary and pays the minimum pension contributions under the auto-enrolment scheme could end up with around £210,000 by age 68. This assumes that you contribute 5%, that your employer contributes 3% and that you get a 3.5% pay rise over time. If the same person cancelled £39 a month worth of unwanted subscriptions and invested them into their pension instead, their retirement pot could rise by £37,000 to £247,000 in today’s money.
Pensions by retirement could even rise by a whopping £73,000 by removing £78 a month, the average cost of a gym membership, plus premium streaming and music services.
Auto-enrolment is available to anyone aged between 22 and state pension age (currently 66), who earns more than £10,000 a year with a single company.
Mike Ambery, retirement savings director at Standard Life, said: “Unused direct debits have a habit of quietly draining our bank accounts in the background.
“The new year is often a time people focus on their physical health, but it’s also the perfect moment to think about your financial wellbeing too.
“Redirecting just a few of those forgotten payments into your pension could make a meaningful positive impact to your financial future.
“However, it is important to double-check the terms and conditions of cancelling any direct debits or subscriptions to avoid potential penalties or impact on your credit scores.”
He added: “If your retirement is decades away, pensions might not feel urgent, but small changes made early on can have an outsized impact thanks to tax relief and the potential power of compound investment growth.
“A financial reset in January can make a meaningful difference to the income you’ll have in later life.”
