People on an average salary who wish to retire at the age of 65 will now typically require a pension pot of almost £450,000 in order to fund their retirement until they are 100 years old, recent analysis has found1.
Never too early to start saving
The research also shows that an individual who starts saving into a pension at 25 years of age will need to invest around £235 a month in order to accumulate a retirement fund of that size. However, a delay of 10 years would see this monthly figure almost double to £428, while someone who only starts saving at the age of 45 would need to set aside £859 a month to attain a pension fund of that size.
This analysis vividly demonstrates the benefit of starting to save for retirement at the earliest opportunity, ideally from the day you first start work. While other financial challenges can inevitably make this difficult, investing regular amounts in a pension throughout your working life provides the best chance of building up sufficient money to enjoy a prosperous retirement.
Better late than never
Although it’s undoubtedly better to start saving for a pension early in your working life, it’s never too late to begin saving for your retirement. Employer contributions, including those made through automatic enrolment, allied with the favourable tax treatment pensions enjoy and their potential for investment growth means that any contributions you make later in life can also still make a huge difference to your standard of living in retirement.
Make pension saving a priority
While it can seem a long time until retirement, it does come round a lot faster than people expect. So, the sooner you engage with the topic, the better the chance of enjoying the retirement you deserve.
The above article is purely for information purposes and does not constitute advice.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
1AJ Bell, June 2019