Brits issued new £500,000 pension warning – 'one move could be life-changing'

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The investment platform estimates that someone who begins contributing to their pension at 36 could lose out on a staggering £525,000 in final retirement savings, compared to som…

The average Brit could be missing out on hundreds of thousands of pounds in retirement savings by delaying pension contributions, according to new calculations. Research by interactive investor shows the average person doesn’t start actively engaging with their pension until the age of 36, which could come at a price.

The investment platform estimates that someone who begins contributing to their pension at 36 could lose out on a staggering £525,000 in final retirement savings, compared to someone who starts at 22 – the age at which working adults earning more than £10,000 are auto-enrolled into a pension scheme by their employer. This is based on contributions of 5%, increasing by 1% every five years until they hit 10% at age 47, and continuing until retirement.

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. With some discussion around younger workers opting out of their workplace pensions, we wanted to illustrate the impact of this, and why – if it makes sense for you financially – staying invested could pay off over the long term.

"We’re not saying that everyone in their early 20s needs to suddenly find large amounts of extra money to put into a pension, but we want people to feel encouraged that even small changes can make a difference over a lifetime of saving."

Ms Esmund added that while people have "lots of compound growth potential ahead" even when starting their investment journey in their 30s, the earlier pensions are on the radar, the better.

She said: "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.”

Contributions are based on full salary, a 2% annual increase to match expected inflation, and an annual investment growth rate of…

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