How to maximise your contributions

One of the ways to potentially grow your savings is to maximise the contributions into your Plan. You and your Employer may be able to contribute, although this depends on the rules of your Plan.

Some employers increase their contributions if you increase the monthly amount you put aside as well. This tends to be a direct match – if you put aside an extra 1%, they add an extra 1%, but there will be a maximum level they will match. For more information and to understand if this applies to your Plan, please see the Your Plan Explained document on PlanViewer.

If you are thinking about increasing the amount you contribute, it may make sense to start as soon as possible. That way your savings will have more time for growth opportunity and benefit from compounding.

Benefit from the power of time

‘Compounding’ describes the way that the growth you achieve on your investments is applied to previous years’ growth as well as the amount you put aside. Compounding can be a lot more powerful than many people realise.  Here’s an example that shows the difference it can make.

Meet Hannah and Stuart who are both saving for retirement. Hannah invests $100 a month from the age of 25. Stuart invests $200 a month from the age of 45.

Both of their savings grow at 5% a year and at retirement they have both put aside the same amount – $48,000.

However, Hannah has almost twice as much money as Stuart simply because it was invested for longer. This meant there was more time to achieve growth on previous years’ growth, as well as on the amount invested.

Important information - The value of your retirement savings may fall as well as rise, and you may get back less than you save.

You may be able to make a one-off contribution to your Plan – for example, from a work bonus. You’re unlikely to have these matched by your employer, but there may be other benefits depending on the country where you work and your employer.

Find out more about how contributions work in your Plan by logging onto PlanViewer and reading the Your Plan Explained document.