A universal pension lesson: Start saving as early as you can

When it comes to saving for your pension, the old adage repeated to revising students rings true; little and often. Lots and often if you can manage it, but the most important thing is that you don’t try and cram all of your preparation in at the last minute. The earlier you start preparing, the better off you’re going to be.

A recent This Is Money article highlights estimates from provider Royal London on what’s a realistic amount to put aside for different age brackets. If you’re planning to retire at 65 with an income of about £19,000 (including your state pension), a 25 year old would need to save 16 per cent of their income (£370 per month). A 35 year old would need to save 23 per cent of their income (£550 per month), and a 45 year old would need to save 39 per cent (£900 per month).

The take away from these figures is clear; get saving early and have a plan you can stick to. Thanks to the Government’s auto-enrolment programme, unless they’re opting out, almost everyone is contributing to a pension. In fact, according to figures from the Department for Work and Pensions, 84% of employees are saving, with a large increase in younger workers.

The programme doesn’t include self-employed workers however, and although there is a background of increased numbers of savers, in reality, the average private sector worker’s pension contribution is dropping. In 2017, the average contribution was at £3,873 – down from £6,782 in 2012. Being realistic about what you’re saving and what you’re able to save is important; we’ll always be able to find something we’d rather spend on our money on in the here and now, but to guarantee ourselves a comfortable retirement, the earlier we start putting our funds aside the better.