So what’s the bad new associated with having had a million? Well, whilst the average UK worker will have earned £1m by the time they hit the age of 56 years, nine months and three weeks old – most of us still won’t have secured enough by then for a comfortable retirement.
The research carried out by Prudential revealed that without averaging out the ‘million’ age between the sexes, men on average incomes will make a million by the time they hit 51, whilst women won’t hit that amount until they are 72.
Whilst £1m in earnings may sound like an ample amount the study showed that despite this, less than two in five individuals expecting to retire this year had saved enough for a comfortable retirement.
Prudential said that the £1m goal was based on an individual working from the age of 18 up to the age of 65, and was before tax.
The insurer went onto highlight that if an individual contributes some of their earnings into a pension pot throughout their life, they could potentially reap the benefits of a significant tax relief. For example, an individual paying £100 of their earnings into a pension pot for 40 working years could receive additional tax relief amounting to around £12,000.
Retirement expert at Prudential, Vince Smith-Hughes explained that whilst we may currently consider making a million to be a pipedream, it will soon become the norm for individuals earning an average salary throughout their working lives.
He went onto say: “Looking at cumulative earnings in this light helps us to understand how much we could potentially save for our retirement. Pensions remain highly efficient tax saving vehicles which can help savers to claw-back some of the tax that they have paid over the years.”
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