The answer is simple: as soon as you can. Ideally, you’d start saving in your 20s, when you first leave school or university and begin to earn a salary. That’s because the sooner you start saving, the more time your money has to grow and the more money you’ll have to enjoy in your retirement.
Recently we conducted some research with young people, aged between 18 and 30 years old and asked them about the best ways to save for their retirement, a quarter say they “don’t know”, whilst 10% think that putting money in a bank account is the best way.
And when quizzed about the state pension, one in five (22%) 18 to 30 year olds don’t believe there will be one when they retire. Despite this, 34% say they aren’t currently paying into a workplace pension. Of those that are paying in, only 8% know both the percentage they are paying in and the amount in monetary terms.
When asked about the new flat-rate, single tier state pension, over half admitted they had absolutely no idea how much it was and only 12% knew the exact amount. When told that the new flat rate state pension would pay £155.65 a week, two fifths say they don’t think this will be enough to retire on, with only 17% believing this would be enough to be sure of a comfortable retirement.
Auto enrolment. A step towards a safe retirement
From our research, it appears that younger generations are pessimistic about the future prospects for the state pension but despite this, many are taking a relaxed approach to their personal pension saving.
Auto enrolment will bring a much larger proportion of the younger generation into pension saving as anyone classified as a ‘worker’, over the age of 22 and earning at least £10,000 a year will be automatically put into a workplace pension. But, auto enrolment minimum contributions are just a starting point and if you are able to pay in more than the minimum, you’ll be in a much stronger position when you come to retire.
To explain the benefits of remaining in a workplace pension, NOW: Pensions went undercover in a fried chicken shop to target those intending to opt out.