Delaying saving for retirement is a costly business
Lawyers who delay saving for their ideal pension until their mid-30s could end up having to save almost £500 more every month than if they’d started at the beginning of their career, according to new calculations from Wesleyan, the financial services specialist for lawyers.
Wesleyan’s research found that, on average, lawyers say they will need an annual income of £35,680 to live on in retirement. To achieve that amount by buying an annuity at age 65 they will need a pension pot of £703,000*.
To achieve this a 25 year-old associate would have to save £700** each month - or £8,400 every year - putting away £336,000 of their own money as the pension pot grows to the target £703,000.
In comparison if they delayed saving for their pension until 35, the same lawyer would have to put away £1,150 each month, £450 more than if they started saving at 25, and equivalent to an extra £5,400 every year. This amounts to an additional £78,000 over the 30 years before retirement.
Samantha Porter, Wesleyan’s Group Sales and Marketing Director, said: “We know from talking to our customers that many wish they had started saving earlier and starting younger is certainly the best way to build up a bigger retirement fund as your money has time to grow.
“With so many other expenses to consider when starting work however, including paying off student debt, it can be difficult to think about saving for retirement as it seems so far away. We would advise lawyers to try and put a little away every month as early as they can in their career and take proper financial guidance from someone who understands their career and can help them balance all of their financial needs.”
Wesleyan launched a new specialist service for law firms this year to support them with business finance planning including professional indemnity insurance, cash flow funding and business continuity. The service will also provide personal financial advice.
Wesleyan is a mutual financial services provider working with doctors, dentists, lawyers and teachers.
