Although saving £50 a month for your 5 year old child could grow to around £13,000 by the time they are 18, the above example takes into account that the money will then remain invested for a further 49 years. Its because of this very long term growth potential that the total benefit of the above example could add up to around £88,000.
To calculate this example we had to make several assumptions including:
- Pension pot growth of 5% each year;
- Charges of 1% each year;
- Tax relief of 20%;
- Retirement age 65;
- The figures have been adjusted to take the impact of 2.5% inflation into account so that the figures show you in today's prices, how much a fund could grow to.
Please bear in mind, that the figures are intended to highlight the approximate cost of delaying a pension - they do not reflect your personal circumstances and are not a guide to future growth.