Londoners working from home could boost pension pot by £236,000
Commuters could save hundreds of thousands of pounds in their pension pots by working from home three days a week, a new study has found.
Working from home for three days a week reduces the annual cost of commuting by as much as £2,000, which when put into a pension, could pay big boons in retirement, Standard Life has found.
Commuters who spend five days a week in the office pay an average of £3,454 per year to get into work by train, compared to just £1,381.60 for those who only go to the office two days a week.
Standard Life analysis finds that someone who began working full-time with a salary of £25,000 a year and paid the minimum monthly auto-enrolment contributions from the age of 22, could have a total retirement fund of £210,000 by the age of 68, allowing for two per cent inflation over the period.
However, by passing on the savings from the average cost of commuting over the course of a career, that pension pot could jump to £370,000, or £160,000 more.
Keeping costs as low as possible and choosing the cheapest pension provider on the market could increase returns even further.
Working from home cost savings
Based on the average commuter costs for Londoners, investors could save £236,000, according to calculations from Standard Life. This compares to £109,000 for Glasgow commuters and £117,000 for those in Manchester.
“Since the pandemic, flexible working options have given workers a number of opportunities, including the ability to save on their commuting costs,” said Mike Ambery, managing director for workplace pension at Standard Life.
“Our calculations highlight how working from home for even one day a week could make a huge difference to your eventual pension pot if you were to pass those savings on in extra pension contributions over the course of a career, thanks to the power of compound investment growth.”
“There’s an ongoing discussion around the right balance between home and office working, and the needs of both businesses and individuals differ. However, it’s worth considering how the financial side of different working setups can influence longer-term goals like retirement.”