What age should you start saving for retirement?
From auto-enrolment to personal pensions: how to make your money work harder for your future today.
When it comes to building financial peace of mind for the future, one question pops up more than any other: what age should you start saving for retirement?
In short, the best age to start saving for retirement is right now. Whether you’re stepping into your very first job or find yourself a few decades into a career, starting today – even with small amounts – gives your money the most time to grow.
Let’s break down the basics of saving for retirement, look at how the numbers stack up over time, and explore how you can make your money work harder for you.
Why your 20s isn't too soon to start
When you’re in your 20s, retirement can feel like a lifetime away. You might have other financial priorities, like saving for a home deposit or clearing student debt. But starting to save for retirement in your 20s is one of the smartest money moves you can make.
Wealth is a steady practice, not a series of sudden risks. When you start early, you unlock a financial superpower: compounding.
Compounding is what happens when the money you save earns a return, and that return earns its own return. Over time, this creates a snowball effect. The longer your money stays tucked away in a pension, the more time it has to benefit from this growth.
Even if you can only afford to contribute a small amount each month, starting in your 20s means your personal financial engine is running early, doing the heavy lifting so you don't have to scramble later in life.
Starting in your 20s vs. your 40s: The true cost of waiting
To see compounding in action, let’s compare two examples.
Sarah and David both want to build a retirement pot. They both aim to set aside £150 a month until they reach age 67 (which is the official UK State Pension age for anyone born after March 1961).
Sarah starts at age 22. She contributes £150 a month for 45 years.
David waits until age 42. He contributes the exact same £150 a month, but only for 25 years.
Because Sarah gave her money an extra 20 years to grow, her total retirement pot won't just be bigger because she put more cash in. It will be significantly larger because compounding had decades longer to spin its magic. David would have to save a much larger amount every single month just to try and catch up to the total Sarah built up comfortably.
Putting it off doesn't just mean you have less time – it means your money has to work twice as hard to get you to the same finish line.
Let's talk about workplace auto-enrolment
The good news is, if you’re employed in the UK, you might already be saving without even thinking about it. This is thanks to auto-enrolment.
By law, your employer must automatically enrol you into a workplace pension scheme if you meet these three criteria:
You are aged between 22 and the State Pension age.
You earn more than £10,000 a year from one job.
You legally work in the UK.
Under auto-enrolment, a minimum of 8% of your qualifying earnings must be paid into your pension pot. This is typically made up of a 5% employee contribution and a 3% employer contribution.
It’s worth noting that for many workplace auto-enrolment schemes, contributions are taken directly from your salary before income tax is calculated.
Think of your employer’s 3% contribution as extra money toward your future that you would completely miss out on if you chose to opt out of the scheme.
Maximise your workplace benefits first
Before you look at other pension accounts, your first port of call should always be to review your current workplace setup. Why? Because many employers offer a benefit called pension matching.
While the legal minimum your employer must contribute is 3%, many companies will match your contributions up to a higher limit. For example, if you choose to increase your personal contribution to 5%, your employer might step up and match it with another 5%.
Important step: Always check with your employer to see if they offer pension matching. Maximising these workplace benefits is an easy way to boost your savings potential.
When and why to use a personal pension
Once you’re making the most of your workplace pension, or if you happen to be self-employed and don't benefit from auto-enrolment, a personal pension can be an excellent tool to help shape your financial future.
A personal pension gives you clear visibility, extra control over your retirement savings, and can offer you more competitive fees. Here’s how you can use one alongside your career goals:
Consolidating old pots: If you’ve ever changed jobs, you likely have different pensions scattered across various providers. You can choose to transfer these old pots into a single personal pension so your money is easier to track, manage, and review in one place.
Boosting your tax efficiency: Money you add to a personal pension benefits from a 25% tax relief top-up from the government, which applies to basic-rate taxpayers (higher-rate taxpayers could claim even more back through their self-assessment).
Tailoring your investment style: Personal pensions often allow you to choose funds that match your specific values or your appetite for risk, whether you prefer a cautious approach or want something more adventurous.
Top tip: Use our handy pension provider search tool to find your old pensions in seconds.
The smart way to build a retirement full of possibility
Ready to take control of your retirement? The Moneybox Personal Pension is easy to use, award-winning, and has one of the lowest pension fees in the UK.* Choose from three simple, expertly curated funds to start building your retirement savings – the smart way.
As with all investing, your capital is at risk. The value of your pension can go down as well as up, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change in the future.
When deciding whether to transfer your pension, it’s important to compare the charges, investment options & benefits between Moneybox and your old provider. Moneybox cannot accept a transfer from a pension associated with your current employer.
If you’re not sure whether the Moneybox Pension is right for you, we recommend you speak with an independent financial advisor.