Whether you picture coffee mornings at home or espressos in Rome, it's never too early to start planning or saving for retirement.
But despite those future goals, our recent survey [1] shows that 61% of people regret not saving for retirement sooner — a reminder that retirement planning is too often overlooked.
Being part of that 61% is nothing to feel ashamed of, however.
After all, not everyone is in a position to put money aside — because let’s face it, life has a way of getting in the way, doesn’t it?
Well, the good news is that it's better late than never to start building up your pension pot.
And, from how often to how much to save for retirement, we're hoping this article provides the kickstart you've been looking for.
Jump to a specific section below:
- Why do so many people regret not saving earlier?
- What are the benefits of saving for retirement early?
- What can motivate you to start saving for retirement now?
- Learning from hindsight: What people wish they'd known
- What to do if you're behind on your retirement goal
- Final thoughts
Why do so many people regret not saving earlier?
Good question. If our survey is anything to go by, the main reason is education — or a lack thereof.
Of the UK adults surveyed:
- 76% agreed that pensions aren't discussed or taught enough in schools or early adulthood.
- 10% said a lack of financial knowledge/confidence has stopped them from adding to their pension.
- 18% didn't understand a single pension term or acronym presented to them.
Additionally, 85% of those working in education agree that not enough is being done to teach students about pensions in schools — although, the national curriculums across England, Scotland, Wales, and Northern Ireland have changed in recent years to afford more schoolchildren a better financial education [2]. As education is devolved to each nation, some include this education from primary school age up to 14. Whereas in England, for example, this is only compulsory in secondary schools, not primary (perhaps, in part explaining why 85% of respondents feel this way).
In any case, we can’t roll back the clock and go back to school as adults, ourselves (sadly). But, the good news is that there’s a world of trusted resources at our fingertips. And by strengthening your understanding today, you can help ensure you feel clearer about how much to save for retirement tomorrow.
What are the benefits of saving for retirement early?
Put simply, the earlier you start saving for retirement, the more time you give yourself to boost your eventual retirement income.
- Whether you're paying into a workplace scheme or a Self-Invested Personal Pension (SIPP), saving for retirement earlier could help you become less reliant on the State Pension.
Rather than waiting to receive your State Pension (which, currently, won’t be until you’re in your late 60s — check the age you’d be able to access it on the Gov.uk website), having other pots ready and waiting provides more financial flexibility once you reach workplace/personal pension retirement age (this is currently 55, but rising to 57 in 2028).
- Saving earlier could also help make your money work harder — for longer.
Investing the money held in a pension is the standard practice, rather than saving it in a traditional savings account that gains interest.
And as investing is considered a long-term strategy, the goal is to give the investments a chance to ride out any market volatility (the natural ups and downs of the stock market that you’d expect to see). There is a risk involved with all investing, but overall, the aim is to improve the value of your retirement pot.
- When you contribute to a workplace pension, your employer and the government do the same.
With a Self-Invested Personal Pension, you can get a 20% tax relief from the government on all personal contributions you make (if you opt in). And that tax relief entitlement rises to 40% for higher rate taxpayers, and 45% if you’re an additional rate taxpayer — the extra 20% for higher rate and 25% for additional rate difference can be claimed through a Self Assessment tax return.
- And just in case that wasn’t enough, the longer you save for retirement, the more chance your money has to compound.
Compounding refers to any money you make on top of your original investment being re-invested — meaning it could make even more money in the long run. Doing this within a tax-efficient account like a pension, means your money is free from capital gains too!
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Is it too late to save for retirement?
Not necessarily.
While starting earlier has its advantages, many people begin saving for retirement later in life due to career changes or other financial obligations. What matters most is the action you take today.
Here are some ways you could make a difference, from today onwards:
- Assess your pension pots: Have a sit down with a cuppa and do life admin. Take a good look at all the paperwork you have for your pension pots, if you have it, and note down the named providers.
- Track down any lost pensions: If you have the feeling that there are some pension pots you’re forgetting, don’t worry! It’s normal for some to get lost, especially as people change jobs a lot over their careers.
It’s worth checking whether you have any, that way you can explore whether combining them into one pot might be a better option for you.
- Increase your contributions: Even a small increase can have the potential to boost your pension pot in the long run. Play around with our Pension Calculator to see what impact your contributions might have over time.
- Take advantage of employer matching: If your employer offers to match whatever you contribute, you could choose to maximise this benefit by paying in more (if you can afford it).
- See if a SIPP (Self-Invested Personal Pension) is right for you: Popular with people who are self-employed or those looking to save for a more comfortable retirement, these are personal pension pots that are separate from a scheme an employer sets up, or the State Pension. Noting, there’s a combined annual allowance for how much can be contributed to personal and workplace pensions each tax year.
They give you a tax-efficient way to increase your retirement savings, as well as more control over how your money is invested – and with Wealthify’s SIPP – a 25% tax-relief top-up is added to everything you contribute, if you opt in. For example, this works out to be for every £80 you personally deposit, you’ll get £20 (25%) added on in tax relief.
What can motivate you to start saving for retirement now?
As we age, our priorities shift, and so does our understanding of money. Financial literacy, family planning, and a growing awareness of retirement costs often push people to take action.
If you feel unsure about where to start, we have a wealth of resources available (including our very handy Pension Guide).
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
Learning from hindsight: What people wish they'd known
Many people admit they made assumptions early in life that hurt their retirement savings later.
Some common examples for this could be:
- Thinking the State Pension entitlement would be enough.
The maximum amount someone can receive for the State Pension is currently £230.25 a week (£11,973 over a year).
- Not checking their workplace pension or missing out on employer contributions.
Maximising your employee benefits with policies like salary sacrifice and contribution matching may be in your interest.
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Underestimating how much they’d need for a comfortable retirement.
According to the Retirement Living Standards [3], you could expect to need a minimum of £13,400 a year for one person’s basic expenses, £31,700 a year for a more moderate standard of living, and £43,900 a year to be considered living comfortably (affording you more financial luxuries and financial freedom).
Awareness is key — and the more informed you are, the better equipped you’ll be to make confident decisions about your financial future.
What to do if you're behind on your retirement goal
First things first, take a deep breath. Feeling behind on saving for your future can be daunting, but there’s no time like the present to make a change.
In fact, the simple act of reviewing your current pension pots can be a good place to start.
This can help you to ensure you’re getting the best deals from providers, which may be in terms of the fees you’re paying or how your money is being invested.
From here, you may be able to change the funds you’re invested in, allowing you to take on more or less risk or choose to only put your money into ethical organisations, which is something we offer at Wealthify.
If you have multiple pensions lying around, then it’s also worth looking into whether you’d benefit from combining them into a single pot. This could help you to keep better track of your savings and reduce the amount you’re paying in fees, too.
And as we’ve already mentioned, increasing your pension contributions really does have the potential to make a difference down the line. Your options here are to pay a larger percentage into your workplace pension each month or open a SIPP (and pay in as and when you can afford to).
A SIPP can be a nice way to supplement a workplace pension, or serve as your sole pension if you’re freelance or a sole trader.
If you’re still feeling overwhelmed or unsure, you don’t have to do it on your own. You could always seek advice from a financial provider to help you map out the best path ahead for achieving the retirement you want.
Final thoughts
Feeling regret about not saving for retirement sooner is normal, but it doesn’t have to be a disempowering feeling. It’s better late than never, and by reviewing your pensions and deciding on a new plan of action, you can still turn things around.
Even the fact that you’re thinking about this now is a step in the right direction. And looking forward can help you take the next steps to the destination (and retirement) you really want.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
