Cancel Unused Direct Debits to Boost Retirement Savings by £37,000
UK households are being urged to review and cancel unnecessary direct debits, as new analysis reveals the average Brit wastes £39 per month on subscriptions and payments they no longer use. Financial experts at Standard Life have calculated that redirecting this wasted money into pension contributions could significantly boost retirement funds.
Substantial Retirement Benefits from Small Changes
Standard Life's detailed analysis demonstrates that someone who begins working at age 22 with a £25,000 salary and pays standard auto-enrolment contributions (5% from employee, 3% from employer) could accumulate approximately £210,000 in their retirement fund by age 68. However, by redirecting just £39 monthly from cancelled direct debits into their pension, this projected fund could increase to £247,000 - an impressive £37,000 boost in today's prices.
The £39 figure represents typical monthly costs for popular streaming services, with many households maintaining subscriptions they rarely use. Experts emphasize that this amount could cover premium video streaming at £18.99 plus premium music streaming at £14.99, highlighting how easily these expenses accumulate without proper review.
Greater Savings Potential for Higher Spenders
The potential benefits increase substantially for those with more extensive unused subscriptions. Someone spending double the average amount on wasted direct debits - approximately £78 monthly - could see their retirement fund boosted by £73,000 in today's prices. This higher amount reflects common combined expenses including an average UK gym subscription at £47.24, premium video streaming at £18.99, and premium music streaming at £12.99.
Expert Advice on Financial Wellbeing
Mike Ambery, Retirement Savings Director at Standard Life, commented on the findings: "Unused direct debits have a habit of quietly draining our bank accounts in the background. The new year is often a time people focus on their physical health, but it's also the perfect moment to think about your financial wellbeing too."
Ambery emphasized the importance of early action: "If your retirement is decades away, pensions might not feel urgent but small changes made early on can have an outsized impact thanks to tax relief and the potential power of compound investment growth. A financial reset in January can make a meaningful difference to the income you'll have in later life."
Important Considerations Before Cancelling
Financial experts caution that while cancelling unused direct debits can provide significant savings, it's crucial to review terms and conditions carefully. Potential penalties or impacts on credit scores should be considered before terminating any subscriptions or payment arrangements.
Ambery advised: "Redirecting just a few of those forgotten payments into your pension could make a meaningful positive impact to your financial future. However, it is important to double check terms and conditions of cancelling any direct debits or subscriptions to avoid potential penalties or impact on your credit scores."
The analysis serves as a timely reminder for UK households to conduct regular financial reviews, particularly as many people reassess their budgets and spending habits during the new year period. By identifying and eliminating unnecessary recurring payments, individuals can redirect funds toward long-term financial security while reducing monthly outgoings.
