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Many of us have good intentions when it comes to saving for retirement, but sometimes those intentions don't stack up in reality. Indeed, research from Zurich UK has found that the pension savings bug only lasts for a month after workers receive a pay rise, with those good intentions being very short-lived.
The research found that workers really do intend to make the most of their saving potential when their salary increases, but quickly slip back into old habits. In a survey, 42% of respondents said that earning more would encourage them to save more into their pension, yet an accompanying behavioural study from Mindlab found that people actually only consider raising their contributions for up to a month after a pay rise.
This shows that there's a very small window of opportunity to change savings habits and put more aside each month, even when affordability improves, suggesting that more needs to be done to encourage people to save as much as possible into a workplace pension.
"Saving money for the future can seem a daunting prospect, particularly when we have financial pressures that we know will affect us in the short term," said Anne Torry, head of Zurich UK Life. "It is therefore unsurprising that, despite good intentions, an opportunity to save more – such as a promotion or salary increase - can often pass us by.
"Many people think that they will save more in the future when they get a pay increase, but in reality they quickly adjust spending to reflect their new salary and so no longer see the increase as extra money that they can save.
"Consistency is key to successful saving, and choosing to save just a little more each month can make a huge difference to your financial future in later life".
Saying that you'll save more in the future is all well and good, but really, how do you know there'll be a time when you can comfortably raise your contributions? As the research shows, even a pay rise doesn't necessarily result in more saving, so it could be time to bite the bullet and commit to saving as much as you can right now.
After all, as Anne says, "waiting until you are a few years away from retirement is likely to be far too late for most people to build up an adequate pension pot and achieve their goals," so don't leave it too late!
If you're not yet enrolled in your workplace pension, now's the time to get involved – and if your employer doesn't offer one yet, automatic enrolment means they will do soon – and commit to saving as much as you can. It may be wise to save over and above minimum contribution levels to boost your chances of building a decent pot, and commit to saving more as you move up the career ladder. Above all, get saving – it's never too early to start.
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