One clever move could add an incredible £46,388 to your pension savings, and boost your pension income from a typical £457 a month to £771. It could transform your retirement, and close the tricky gap between the typical pension income, and the amount people actually need for a comfortable retirement. But is it right for you?
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What's the cunning move that could solve your retirement issues at a stroke?
Postponing retirement for five years.
The difference it makes to your income is striking. Aegon research showed that on average, people aged 55-64 contributing to a pension were paying £355 a month and had a fund of £105,496 (which would produce an income in retirement of £457 a month).
Based on this, if they keep contributing £355 a month (and assuming a relatively modest 4% investment growth), by the age of 70, the fund would be worth £151,884, which might produce a monthly income for life of £771 - a 67% increase.
Working for five more years, isn't necessarily something with enormous immediate appeal. However, it's worth seeing it in some context. You don't have to stick with your current job, or your current employer. You don't have to do the same kind of work or even work full time.
By combining a job you enjoy, with fewer hours and a better work/life balance, you could actually find a happy medium that stops you from feeling like you pulled the plug on your working life while you still had plenty of good years left in you, but doesn't feel like you're working your way to your grave either.
Given the fact that the proportion of people working after the age of 65 has doubled to 10.2% in the past 30 years, there's every indication that plenty of people have found a way to continue earning money that works for them.
The younger people are, the more comfortable they are with a longer working life. Some 25% of people are happy to work for as long as they are able - compared to a third of younger people. Meanwhile, just 12% will stop work as soon as they reach the state pension age - compared to 3% of younger people.
If you can't bear the idea of postponing for that long, then you can still make a big difference by putting off retirement for three years. Those who delay by three years can build up an extra £25,442, increasing their monthly income by £164 to £621, a 35% increase.
Steven Cameron, Pensions Director at Aegon said: "For some, the decision to work on past 'traditional' retirement age will be a lifestyle choice, but for others an inadequate pension pot may make it a necessity. The positive news or silver lining as some may see it, is that working a few years longer and keeping saving in a pension can dramatically improve retirement incomes."
"For those early on in their working lives, starting saving as soon as possible is key. But we can't turn back time and those approaching traditional retirement age with less than they might wish for still have choices. For those who are able, continuing to work for a few years more not only keeps a salary coming, it can also produce a substantial uplift in retirement income."
But what do you think? Does the idea of postponing retirement appeal? Let us know in the comments.