The average worker starting work aged 18 in 2016 will earn their first million just after their 46th birthday. They’ll have paid £238,000 in tax and national insurance by that point. A worker saving 5 per cent into a pension will receive pension tax relief of £10,000 on their first earned million.
Young workers starting their careers in 2016 will have earned a total of £1 million by the time they are 46 years old, according to new analysis by Prudential. The results show that an 18 year old starting their career this year and earning the projected average salary for their age group throughout their career, will have amassed earnings of more than £1 million by 2044 – at the age of 46 years and 1 month.
The analysis is based on figures from the latest ONS Annual Survey of Hours and Earnings (ASHE) and assumes that future average wage inflation will mirror average pay increases seen during the period 2006 to 2015.
By the time the average worker has earned their first million pounds they will have paid approximately £138,500 in tax and £99,680 in national insurance – a total of more than £238,000. However, the impact of tax on a lifetime’s earnings can be reduced by making contributions to a pension.
An average-earning individual paying 5% of their income personally into a pension over the course of their career could receive tax relief of £10,000 on their first earned million.
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