Earning £1 million in a lifetime may seem like a far-off dream when you take your first step onto the career ladder, but an investigation carried out by Prudential has revealed that the time it takes to bank £1 million has fallen, particularly for women, with the average worker now being nearly 56-and-a-half years old when they hit this target.
By analysing the latest release of the Office for National Statistics' Annual Survey of Hours and Earnings, Prudential has calculated that women have shaved an average of nine months off the age they will be when they reach £1 million in earnings. If a woman earns the average wage over the course of her working lifetime, she will now be 69 years and seven months old when she banks this total.
This is a distinct decrease from last year's finding, which set the age at 70 years and five months, and it is an even more dramatic fall from 2012, where a woman would have had to work until she was nearly 72 years and six months old before she banked her first million.
This drop in age has closed the gap with men slightly, but women are still nearly 19 years behind their male counterparts. The research found that a man earning the average over the course of his career is now just over 50 years and eight months old before he hits £1 million, one week earlier than last year.
However, the fact that the age of women banking £1 million is falling is still something to celebrate, and it could even explain why women's confidence in their retirement incomes is on the rise. Indeed, Prudential's 'Class of 2015' research recently revealed that the expected annual retirement income of £14,300 for women retiring this year is at its highest level since the start of the survey.
Now that income is on the rise and the million pound milestone is moving closer, it's time to make the most of that extra cash and secure your future.
"Earning £1 million in a lifetime may seem improbable to most people when they start out in their career, but with steadily increasing earnings and longer working lives, it is a milestone that is becoming more achievable," commented Stan Russell, a retirement expert at Prudential. "However, even in the early years of work, the decisions made about saving and spending can have a big effect on finances later in life. The message is simple: for the best possible retirement income it's important to save as much as you can afford from as early as possible in your career."
Putting aside some cash for your pension pot makes even more sense when you weigh up the tax advantages. For instance, by the time the average person banks £1 million, they will have paid more than £212,300 in tax. However, by putting some savings away into a pension scheme, you could save around £10,000 in tax. Plus, you will also benefit from your employer's contributions – it's a win-win situation!
So, if you want to make the most of your earnings and secure yourself a comfortable retirement income, make sure you're signed up to your company's pension scheme. Try to put as much as you can into the pot and remember to increase it every time you get a welcome pay rise. It's also a good idea to have some other savings pots on the go – check out our savings best buys to find the best home for your retirement nest egg.
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