The potential impact of your personality type on losing £121,000 from your pension explained

In a groundbreaking analysis, it has been suggested that an individual's personality could significantly influence their retirement savings. The study, which did not specify the pension insurer behind the discovery, indicates that a person's personality type could make a six-figure difference to their pension pot over a saving lifetime.

The research differentiates between Type A and Type B individuals. Type A individuals are highly organized, ambitious, and driven by a sense of urgency. They are more likely to start saving into their pension early and boost their savings where possible. On the other hand, Type Bs may be less inclined to see retirement saving as a priority and contribute only the minimum or nothing at all. They are more spontaneous, laid back, and likely to go with the flow.

The trend offers a broader lesson for money in retirement. A consistent, less sporadic approach to pension saving, reminiscent of the Type A personality, could significantly boost your retirement pot. Delaying pension saving can result in a loss of up to £105,000 in retirement funds, depending on the age at which contributions are resumed, according to the analysis.

Consistent pension saving from the age of 22, even with lower contributions, can result in a higher retirement pot compared to delayed or sporadic saving. For instance, someone who begins working at the age of 22 on a salary of £25,000 a year and pays only the minimum monthly auto-enrolment contributions could have a total retirement fund of £210,000 by the age of 68, allowing for 2% inflation over the period.

However, if an individual chooses to pause contributions between the ages of 25 and 30, their final retirement pot could be reduced to £184,000. A stark contrast is seen when comparing a Type A personality, with an 8% employee contribution, who could build up a retirement pot of £289,000 by the age of 68. A Type A personality, with a 6% employee contribution, could end up with a retirement pot of £236,000 by the same age.

Understanding how your approach to saving today can impact your retirement pot tomorrow is crucial, according to Dean Butler, managing director for retail direct at Standard Life. By saving as soon as possible, individuals can potentially add more than £100,000 to their pension. The power of years of potential compound investment growth is significant in building a retirement pot.

The assumption for the analysis is a starting salary of £25,000, 3% employer monthly contributions, 5% annual investment growth, 2% inflation, and an annual management charge of 0.75%. These figures serve as a starting point for individuals to understand the potential impact of their savings habits on their retirement pot.

The social media trend labels people as either Type A (Competitive) or Type B (Easygoing). Regardless of your label, it's essential to consider the long-term implications of your savings habits and strive to save consistently for a secure retirement.

The potential impact of your personality type on losing £121,000 from your pension explained