Would you give up takeaways, Netflix and the gym for a £157k bigger pension?

Could you ditch Netflix Premium, your high-end gym membership and Friday night takeaways if it meant you could boost your pension by £157,000 or more, and maybe even retire early?

That’s the potential trade-off that’s on the table, according to new analysis by Standard Life.

Its findings highlight how even fairly modest increases in pension contributions can significantly improve the size of your pot in retirement – especially for younger people – thanks to the power of compound investment growth.

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For example, someone who starts working at age 22 on a salary of £25,000 and pays the minimum auto-enrolment contributions (5% employee, 3% employer, known as the 8% pension rule) could build a pension pot of around £210,000 by age 68, adjusted for inflation.

However, increasing monthly contributions by just 1% – roughly the price of a Netflix Premium subscription (£18.99) – could grow this to £236,000, an uplift of £26,000 in today’s prices.

Those who can set aside slightly more each month, such as the equivalent of a monthly gym membership, could build up an even bigger pension pot. Investing an extra £42 a month – less than the average UK gym membership – into a pension from the age of 22 could add £52,000.

And for those willing to sacrifice a monthly takeaway spend of £60, they could boost their retirement savings by nearly £80,000 over the long term.

Taken together these pound-pinching measures have the potential to equate to an extra £157,000 or more at retirement.

Mike Ambery, retirement savings director at Standard Life, said: “You don’t need to give up all the things you enjoy – it’s about finding the balance between living for today and planning for tomorrow that works best for you.

“Redirecting a modest amount each month – even something as relatively small as the cost of a streaming subscription – could add tens of thousands to your pension by the time you retire. And for those able to contribute a little more, such as reallocating part of their gym or takeaway budget, the long-term benefits could be even greater.”

*Assuming 3.50% salary growth per year, and 5% a year investment growth. Figures account for 2% inflation. Annual management charge of 0.75% assumed.

Easy ways to increase pension contributions

Paying more into your pension doesn’t have to be painful. While giving up some little extras can be cost-effective for your retirement, not everyone will want to live a Spartan lifestyle for the sake of their pension. But there are ways to up your contributions without sacrificing your current standard of living.

1. See if your employer will chip in more

Some employers will match any extra pension contributions you make, so if you increase yours, they might increase theirs too. That’s essentially free money for your future self. It’s worth checking if this applies to you and making the most of it.

2. Use ‘salary sacrifice’

See if your employer offers ‘salary sacrifice’. These are schemes where you can exchange part of your salary for pension contributions. This could lower your National Insurance contribution payments, while giving your retirement savings a boost.

3. Got a pay rise? Remember your pension

“When your salary goes up, consider putting a bit of that increase into your pension. You won’t miss what you never had, and it’s a great way to grow your savings without feeling an impact on your monthly budget,” Standard Life’s Ambery said.

4. Lump sums can go a long way

If you get a bonus, tax rebate, or even some birthday cash you don’t need right away, putting a chunk of it into your pension could give your future savings a significant boost. Ambery said: “Thanks to compound investment growth, it could be worth much more by the time you retire.”