Financial planning strategies aren’t
always that complex. As a Friday
afternoon treat, we’ve put the
following example together to
illustrate that very point…
MAKE YOUR CHILD A MILLIONAIRE ON THEIR 60TH BIRTHDAY
Many don’t realise that you can make a pension contribution for a child and it will still receive tax relief, even though the child doesn’t have earnings. Saving for retirement is difficult for a lot of people, so wouldn’t it be great if you could provide security in retirement to your children?
Here’s how it’s done…
You pay a pension contribution of £3600 a year gross (which thanks to the tax relief only costs you £2880 a year/£240 a month). You do this from when the child is born to age 18 (18 years of payments) and then stop.
Let’s assume an investment growth rate of 5.5% after charges, then the fund would be worth: -
Fund at age 60 = £1,010,322
Fund at 65 = £1,320,450
Fund at 70 = £1,725,775
In today’s terms (using the age 60 figure) this would provide your child with a tax free lump sum at retirement of £252,580 and an approximate income of £45,464 per annum.
Surprised? Find out more about this and our other great ideas by talking to us today – we might surprise you further…