Britons urged to consider 'straightforward' strategy which could boost retirement savings by £32,970

With the average Briton expected to spend £796 during Christmas 2024, PensionBee's research explains how setting aside just a quarter or half of this amount for retirement savings could produce significant returns.

There are regional variations in Christmas spending, with Londoners expected to spend £977 compared to £698 in the North East.

By redirecting just £200 of the average Christmas budget into a pension, savers could add between £305 and £521 to their retirement pot, depending on their age.

For those willing to save £400, figures show they could see a projected pension boosts ranging from £608 to £1,039.

These figures account for the government's 25 per cent tax top-up and assume a five per cent investment growth rate.

The impact varies based on someone's age, with those furthest from retirement seeing the greatest benefit from compound interest.

For example, a 25-year-old starting today could accumulate an extra £16,483 by retirement age through annual £200 Christmas contributions.

This figure doubles to £32,970 if they opt to save £400 each year from their Christmas budget.

Becky O’Connor, Director of Public Affairs at PensionBee, commented: “With Christmas just around the corner, it’s a great time for savers to reflect on their festive spending habits and consider whether some of that money could be redirected into their pension.

"Even contributing a small amount can see savers benefit hugely from the power of compounding interest and tax incentives from the Government, significantly boosting retirement savings over time.

"Adding a lump-sum 'Christmas contribution bonus' into your pension is straightforward, and your future self will thank you for it.”

Even those closer to retirement can see meaningful gains. A 55-year-old could boost their pension pot by £3,528 through annual £200 contributions.

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35-year-olds could potentially make £11,509 through £200 yearly contributions, while 45-year-olds could add £7,230 to their retirement savings.

These projections demonstrate how small seasonal sacrifices could lead to substantial long-term benefits.

They assume a five per cent annual investment growth rate and account for inflation at 2.5 per cent per year.