Start early, save smarter

Whilst many younger adults are proactive on pensions, saving for retirement may slip down the priority list for some, squeezed out by accommodation costs and other everyday bills. Research¹ highlights a crucial truth – delaying pension contributions can be far more expensive than most people realise.

The analysis shows that if you begin saving at 20, contributing around £264 a month could build a £1m pension pot by age 65 (assuming generous 7% annual growth after charges). However, if you delay until 40, you would need to contribute roughly £1,235 a month to achieve the same outcome, that’s nearly five times as much.

The difference comes down to compound growth. Starting early gives your investments decades to grow, meaning much of your retirement pot comes from returns rather than your own contributions. In the above example (illustration purposes only), someone starting at 20 would contribute £142,560 in total, while a later starter at 40 would need to pay in around £370,500.

This illustrates a simple but powerful principle; time in the market is often more valuable than the amount you invest. Even small, consistent contributions early on can outperform larger amounts contributed later.

We understand that balancing pensions with everyday expenses isn’t easy, particularly early in your career when incomes are lower. Contributing what you can, even modest amounts, sets the foundation for long-term growth. Depending on investment performance, starting early reduces financial pressure later and allows you to harness the full power of compounding.

The figures quoted in this article are for illustration purposes only.

¹AJ Bell 2026

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.