Visit us on Facebook Visit us on LinkedIn Visit us on Twitter Visit us on YouTube Visit us on Instagram

Returning to the Office…

Amid the doom and gloom of the last eighteen months, something positive: £16.6bn of consumer credit was repaid last year, the most repaid since the Bank of England records began in 1993 and the first annual net reduction since 2011.

While it has been tough on our finances, it’s also led to big changes in spending habits. We may have spent more at Amazon and on alcohol, but we’ve been net savers overall.  If we have established new good habits, why not keep these now we’re opening up and more likely to be returning to work.

If your new pattern of work allows for less traveling, you should have some savings to make.  So imagine if you continued to live on 80% of your income when you return to work. What could the other 20% do for you?

The numbers

If you earn the average full-time UK salary of around £30,000 per year, then 20% of your income is about £400 a month after tax.

If you were to put that 20% into a pension, it would add up quickly: after 20 years at a 6% annual return (that’s a fair rate for a long-term investment), you could have over £270,000 extra in your retirement pot.

Given that you’ll need almost £450,000 to retire with an average annual salary if you live to 100, that’s a considerable chunk.

Put simply, most of us don’t have enough saved for our retirement. The average pension pot currently stands at around £50,000 according to Aegon.

The timing

If you put £50 each month into your pension from age 20 to age 40 and then stopped contributing, retiring at 60 years old this could give you around £111,268.

If instead you waited until you were 40 years old and played catch-up by saving double, £100 a month, until you retired at 60, this could give you around £69,388.

That’s 37% less, and you paid in twice as much.

Compound interest means the earlier you save, the better – and the difference is huge.  There’s a link at to explain my assumptions for those who are interested.

The reality

You might say that you’ve found it easier to spend less during lockdown without commuting, buying lunch out and other costs associated with going out to work every day.

But when circumstances are forced upon us, we make changes. We adapt to our new reality. Many people who were furloughed survived on 80% of their previous income.

As we return to work, I urge you to continue to reserve part of your income for your retirement, while you’re in the habit. Even if 20% is more than you’ll manage (I suggest a minimum of 12.5% in my book The Money Plan, which is the first hour of each working day), do what you can now because it will make a HUGE difference to your future.

Keep making lunch at home. Buy a thermos for your coffee. And remember those months when 80% was enough for you. Your future self will thank you.

For more money planning ideas visit

Five things you can do to save money now the workplace is opening

  1. Stop buying coffee and water on your way to work, or at lunch, this could save you over £500pa.
  2. With flexi-working, look at buying new ‘flexi’ tickets which allow you to buy discounted block bookings of day/return tickets.
  3. Bring in your own lunch, it could save you around £1000pa and it’s likely to be healthier.
  4. If you are required to work from home, make sure you are claiming your Working from Home Allowance which is an extra £6pw.
  5. If you need help saving money, try my Bank Account System and use the WAM account to limit your spending – see for details.

How to spot and avoid a pension scam
The National Insurance increase and State Pension triple-lock