When is the right time to start saving for retirement?

At a young age it is often hard to save as you need to consider a number of things such as your rent, food, a night out with friends and unexpected expenses, let alone additional funds that you can’t touch for another 40 or so years.

So when should really start saving for your retirement? Well, most money experts say that you should start putting money aside for this as soon as you begin earning, so around your 20s.

You have three key tools that you need to consider to help build up that retirement fund:

  • Time
  • Money
  • Compounding

It is true that the sooner you get started, the more power each of these tools will have to work for you. In fact, it’s predicted that you will need to save £10 per day to give yourself the best chance of having at least the national living wage of £16,500, to rely on when you retire.

With life expectancy increasing, the younger generation are going to be living and working longer. And despite the change to state pensions it’s looking unlikely to provide enough income in retirement. Every year that you put off saving for your retirement the more you will have to put out during those later years of your working life.


Pensions will offer you tax relief on the money that you pay in, as well as what you get in return. It comes in two forms, workplace and personal:

A Self-invested pension – this offers the biggest investment choice but, whatever personal pensions you choose you should shop around and compare the charges and investment performances. If you want to know more about pension saving schemes check out Money Advice Service.

Workplace pension – this is known as occupational or a company pension. It’s a way of saving for your retirement that is set up by your employer. All employees that are aged between 22 and the state pension age of around 60 to 65, who earn more than £10,000 a year, will be offered a workplace pension. Your employer contributes to the funds of your pension too, usually paying 3% to 10% of your annual salary each year.

Personal pension – many people also take out a personal pension where you pay regular monthly amounts or a big chunk to a pension provider, who invests the money on your behalf. These payments can be altered as your income changes throughout your working life whilst the provider usually offers a range of investment funds that gives you greater invest freedom, compared to a workplace pension scheme.

Now it’s time to start putting away that money, comparing the best options and preparing properly for your retirement. Don’t leave your financial future to chance, take control and look forward to having enough money to comfortably live when you decide to quit working.

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