myPlan shows you how big your retirement 'pot' may need to be and how close you could be to achieving your goal.
Planning ahead - are you saving enough?
It can be hard to plan for tomorrow when you're busy living for today, but if you begin planning and saving now you'll have more options in the future.
- With the state pension and some private pensions falling short, can you rely on these alone to provide sufficient income?
- You need to be making the right investment decisions now to help you keep pace with inflation
- People are living longer - you'll need to make sure your money lasts as long as you do. If you start saving now, you're more likely to have enough.
You'll be surprised at the big difference it can make to your savings if you start early. This is because of "compounding".
Start saving early and see the benefits of compounding
Compounding is a simple concept. When you invest money you earn interest or income on your capital. Then next year you earn on both your original capital and the interest from the first year, and so on. It’s the snowball effect - as your capital “rolls down the hill” it becomes bigger and bigger.The earlier you start investing, the more time you have for compounding to take effect. The table below shows what would happen if you invested £100 a month over 40 years, and this money grew at 5% a year†:
| Years | Cost to you | Value of investment |
|---|---|---|
| 5 | £6,000 | £6,962.30 |
| 10 | £12,000 | £15.848.15 |
| 15 | £18,000 | £27,188.99 |
| 20 | £24,000 | £41,663.10 |
| 25 | £30,000 | £60,136.14 |
| 30 | £36,000 | £83,712.95 |
| 35 | £42,000 | £113,803.59 |
| 40 | £48,000 | £152,207.72 |
The effect will continue even if you have to stop investing for a while - if you were to invest £1,000 and then stop, compound interest would ensure that the money continued to grow - giving you £7,039.99 after 40 years (assuming growth of 5%). †
So take control now. Start by checking whether your finances are on track by using myPlan - our educational calculator, then once you have the results you can start looking at your options.
† These calculations are for illustration purposes only, and exclude initial and annual management charges.
