When it comes to pensions, the most important thing isn’t how old you are right now, it’s when you start saving.
The earlier you start, the better. That’s because your money has more time to grow thanks to investment returns and compound interest.
Why it’s important to start early
Let’s look at a quick example:
Emma
Begins investing at age 25 and stops at 35: just 10 years of contributions.
Puts in £300 each month, for a total investment of £36,000.
Thanks to the power of compounding, assuming a 5% annual growth rate, her savings grow to an impressive £208,091 by age 65.
James
Starts investing later, at age 40, and continues consistently until 65 - 30 years in total.
Also invests £300 each month, contributing a much larger total of £90,000.
By age 65, his pot grows to £164,873, assuming the same growth rate as Emma.
Even though James invested three times as much, Emma ends up with more, showing how powerful an early start can be. Remember, this is just an example and not a guarantee of future returns.
Why 12% matters
To stay on track for retirement, a good rule of thumb is to contribute 12% of your salary into your pension. If you’re enrolled in a pension scheme by an employer, that total includes both your contributions and anything your employer adds.
For example:
If your employer contributes 4%, you’d only need to put in 8% to hit the 12% total.
If they contribute more, you may already be closer than you think.
Saving at this level across your working life helps build a pension that can support the lifestyle you want later on. But remember, this isn't financial advice, always think about your personal situation before making changes.
Not at 12% yet? That’s okay, small increases help
If you’re not there yet, don’t worry. Everyone’s situation is different, and it’s never too late to improve your pension. Even small changes can make a big difference over time!
If you’re in a workplace pension, see if your employer offers Salary Sacrifice. It’s a simple way to cut tax, increase your pension savings, and often boost your take-home pay. Even if that’s not available, try increasing your pension contributions by just 1%: you can check how it affects your contributions in our app.
If you’re contributing to a personal pension, consider adding a small extra amount each month, like £50. These small changes can make a big difference over time.
Use our forecast tool to see how even small steps today could lead to a more comfortable retirement tomorrow.