“It takes as much energy to wish as it does to plan,” said Eleanor Roosevelt, the wife of the 32nd U.S. President, Franklin D. Roosevelt. Her words are a powerful reminder that turning dreams into reality - especially when it comes to retirement - requires more than just hoping; it requires intentional planning.
Many of us imagine a comfortable retirement, yet few actively take steps to make it happen. Those retirement dreams won’t simply materialise without effort - they must be planned and earned. A recent impartial survey by YouGov for Unbiased, which interviewed 2,000 UK adults aged 18 to 99, revealed that 57% of respondents feel uncertain about whether they have enough time to save for their desired retirement.
Additionally, over a quarter of those surveyed are unsure about the annual income they’ll need during retirement, and one in five do not take advantage of financial advisers' expertise. Instead of simply daydreaming, it’s crucial to seek advice, make use of available resources, and commit to building a secure retirement.
This article will explore why starting a pension is essential and how the timing of that start can impact your retirement savings, whether that be starting a pension at 30, starting a pension at 40 or starting a pension at 50.
Why should I start a pension?
Starting a pension is one of the most important financial steps you can take for a secure and comfortable retirement. Starting a pension as early as possible is always the smartest approach.
The best time to begin saving for retirement is now, no matter your age. Ideally, starting in your twenties allows more time for your savings to grow, helping you build a substantial retirement fund. But even if you’re starting later, it’s never too late to make meaningful contributions and work towards a secure pension.
If you’re aged between 22 and the state pension age, and earn over £10,000 per year, your employer is required to enrol you in a workplace pension scheme. If you’re uncertain about your enrolment status, check with your employer to ensure you’re on track.
There are several reasons as to why it is crucial to start and have a pension.
Firstly, it will allow you build an income for retirement, helping to replace your salary once you stop working. It provides a reliable income stream, reducing financial stress and uncertainty as you age.
There are also great tax advantages. Pension contributions often come with tax benefits, making it easier to grow your savings. In the UK, for instance, contributions to workplace pensions typically receive tax relief, meaning a portion of what would have gone to taxes instead boosts your retirement fund.
Furthermore, if you’re enrolled in a workplace pension, your employer usually contributes as well. This is essentially ‘free money’ that increases your retirement savings over time, helping your fund grow faster than with just your own contributions.
As touched upon, the earlier you start the better. That is because the more time you have, the more time your money has to grow through compound interest - where you earn returns not only on your contributions but also on the returns your money has already generated. Even small contributions in your twenties or thirties can grow significantly by the time you retire.
Another key point to remember is that the state pension may not be enough to see you through a comfortable retirement. By having your own pension fund, you gain greater financial independence, allowing you to enjoy more freedom and flexibility in retirement.
Lastly, planning for retirement can provide you with peace of mind. Knowing you’re taking steps toward financial security can be a massive weight off your shoulders. A well-funded pension reduces worries about the future and allows you to enjoy your later years without the burden of financial uncertainty.
In short, starting a pension is about preparing for a comfortable, worry-free retirement. The sooner you start, the better positioned you’ll be to make your retirement dreams a reality.
Getting started in your 20s…
In your 20s, the best advice is straightforward: build the habit of saving for your pension as early as possible.
Currently, employees aged 22 and over who earn more than £10,000 are automatically enrolled in a workplace pension. While opting out is an option, staying enrolled has clear benefits: if you contribute 5% of your earnings, your employer must add at least 3% extra. Starting young means you benefit from these additional contributions and allow your pension to grow over time.
With generally fewer responsibilities and lower expenses in your 20s, this is an ideal time to get ahead with savings - especially since contributions are automatically deducted, making it easy not to miss them. As you grow older, financial commitments often increase, which may limit your saving power. So, starting now maximises both your saving potential and the benefit of compounding growth, setting you up well for the future.
Pensions can seem overwhelming when you're just starting out, but by breaking them down, you can make confident decisions - no matter where you are in your retirement journey. Check out our beginner's guide to kickstart your retirement planning today.
Should I start my pension at 30?
Major expenses in your 30s - such as buying a home, starting a family, or getting married - can make it challenging to prioritise saving. With tough financial choices to make, you make look to make cuts, including from your pension. However, this could have serious long-term consequences.
By stopping or reducing your pension contributions, you miss out on three key benefits: valuable tax relief, employer contributions, and potential long-term investment growth.
If a reduction is necessary, lowering your contributions temporarily will have less impact than stopping altogether. However, if you do need to pause contributions, most modern pensions allow you to restart without extra fees whenever you’re ready.
For those currently in their 30s, the state pension age will be 68 by the time they retire. While the current state pension age is 66, it is gradually increasing: for those born after April 5, 1960, the age will rise incrementally, reaching 67 by April 2028. Eventually, it will move up to 68, affecting those born after April 1977.
Relying solely on the state pension may not be sufficient for a comfortable retirement. That’s why it’s crucial to consider joining your workplace pension scheme and, if possible, supplementing your employer’s contributions. The earlier you start saving, the more opportunity your pension fund has to grow.
Additionally, from 2028, the earliest age for accessing your state pension will increase to 57, making it even more important to start planning early for a secure retirement.
In your 30s, you must ensure that you safeguard your pension savings as much as possible, even when other financial demands increase. Protecting your pension now helps ensure a more secure retirement down the line.
Life begins at 40…
As you enter your 40s, it’s never too late to start planning for retirement. At this stage, you may be at the peak of your earning potential and have a more stable financial situation, which gives you the opportunity to increase your pension contributions.
Boosting your contributions allows you to take full advantage of tax relief and may also enhance your employer’s contributions, helping to make up for the time you’ve missed. Additionally, if you’ve had multiple jobs over the years, it’s a good idea to track down any previous pension schemes and consider consolidating them for easier management.
Investing in assets like buy-to-let properties can also provide an additional income stream for your future. With decades of potential growth ahead, you still have plenty of time to build a solid pension pot before retirement.
So, if you’re starting a pension in your 40s, you have a range of options and a significant amount of time to plan for a comfortable retirement.
Starting a pension at 50 – is it too late?
While 50 is not typically the age most people consider when thinking about when to start a pension, it’s certainly not too late.
In your 50s, you may have reached your peak salary, and your expenses from previous decades may have significantly decreased. This creates an ideal opportunity to increase your pension contributions and boost your savings.
However, starting a pension at 50 means you might need to reconsider when you plan to stop working. You may need to extend your working years beyond the typical retirement age of 67.
To stay on track with your retirement goals, make sure to locate any old pension pots and maximise your contribution allowances. This can help ensure that your retirement plans remain achievable.
If you were moving home, would you leave all the packing until the night before, or would you start packing gradually to make the process easier and less stressful? The advice is simple: the earlier you start a pension, the better. The sooner you begin, the more time your money has to grow and you can enjoy a more fruitful retirement.
No matter when you begin planning for retirement, Reeves Independent is here to help. Book a free pension and retirement review with Reeves today and take the first step toward a brighter, more secure future.
