The average Brit could be missing out on more than half a million pounds in retirement savings by waiting until their mid-30s to start paying into a pension, says interactive investor.
According to the firm’s research involving 2,000 UK adults, the average person doesn’t start actively engaging with their pension until the age of 36.
However, someone who begins contributing to their pension at 36 could lose out on almost £525,000 in final retirement savings compared to someone who starts at 22 who becomes increasingly engaged with their pension.
The example takes a 22-year-old who begins contributing 5% to their pension and increases this by 1% every five years until they hit 10% at age 47 and continues to contribute 10% until retirement, versus someone who starts contributing 5% at age 36 with a 3% contribution from their employer up until retirement.
The former could have a total pension pot of £887,057, while the latter would accumulate £362,856.
Camilla Esmund, head of investor campaigns at interactive investor, said: “The typical adult starts paying attention to their pension at 36 – 14 years after auto-enrolment kicks in.
“Of course, in your thirties you still have lots of compound growth potential ahead and it is never too late to make a difference, but the earlier pensions can be on your radar, the better. Because that delay can still mean missing out on years of growth; and you may be leaving money on the table if you’re not making the most of the valuable tax-advantages, that pensions offer. The lost opportunity could be worth life-changing amounts of money.”
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