Is it too late to start a pension?

Laura Miller

by , Freelance financial journalist

at PensionBee

23 Sept 2020 /  

Old couple sitting infront of a cliff edge looking over the sea

The best time to start a pension is yesterday! The second best time is today. It’s definitely not too late to begin pension saving at 35, 45, or even 55, but it does become trickier to build up a pot to sustain you in retirement, so you’ll have to pull out all the stops using the tips and tricks below.

Starting a pension at 35

At 35 you still have more than three decades before you reach the traditional retirement of around 67. Plenty of time to get things sorted for a comfortable later life, and benefit as much as possible from the power of compound interest on your savings.

Changes in the minimum age to receive the State Pension mean you won’t be eligible for it until at least 68. Based on its present value, £230.85 per week, it would be worth £10,600 a year.

Changes in the minimum age to receive the State Pension mean you won’t be eligible for it until at least 68

By age 67 you could also look forward to a workplace pension pot of £101,337, based on average assumptions*. That may sound a lot, but over a 20 year retirement that’s about £5,050 a year.

If you could squirrel away an extra £100 a month on top of your Auto-Enrolment minimum contributions to your workplace pension, you could boost your pot to £150,738, bumping up your annual income to £7,536 for 20 years. Adding the State Pension to that could give you £16,000 a year.

If that still doesn’t seem like much (it isn’t), now is the time to put as much into your pension as possible. The earlier you do the longer it has to grow, and investment returns to do the heavy lifting of making your pot bigger.

Starting a pension at 45

By now, in most cases early retirement (say at age 55) will be off the table, so you have around 20 years to build up a pension pot. By age 67 you will be eligible for the State Pension. On top of that, based on the same average assumptions, you can expect a workplace pension pot of £63,653.

You’ll probably need to think about how to increase that as much as possible in the time you have before retirement, perhaps working full-time for longer, or continuing to do some work while semi-retired.

You could also increase your monthly contributions now. This lets you benefit from tax relief, and employer contributions. Saving an extra £100 a month into your workplace pension could give you a pot of £94,684, more than £30,000 bigger. That would put you on track for an annual income, with the State Pension, over 20 years of around £13,800.

Aiming to pay off your mortgage and other loans before retirement is a good way to ensure this modest amount doesn’t have to stretch too far.

Starting a pension at 55

Don’t worry, all hope is not lost even now, there is still plenty you can do to help yourself.

Starting a workplace pension at 55 and retiring at 67 only gives your cash 12 years to grow, so you could expect a final pot of £31,732. Over a 20 year retirement that is an income of just under £1,600 a year. On top of that you will have around £9,100 a year from the State Pension (at current levels), giving an annual total of £10,700.

Contributing an extra £100 a month to your workplace pension could bump your pot up to £47,201 by age 67, for an overall yearly total income of £11,460. But to make up for lost years due to starting a pension in your 50s you would need, if possible, to make much larger additional contributions.

Working beyond age 67 may be a necessity based on your expected retirement income, to help you to increase your pot. That may mean a change of career, but you would continue to receive valuable “free money” from employer contributions to your pension. Over-60s are also the fastest growing age group among the self-employed, which could provide a boost to your income.

To reach 55 and never have saved into a pension is quite rare, so it’s worth taking some time to hunt through old paperwork and use the government’s Pension Tracing Service, to see if you have old pensions from previous jobs you’ve forgotten about.

These could be very valuable; more employers offered so-called ‘gold-plated’ defined benefit, or final salary, pensions in the past than they do today, and you may find your lost pot is one of those.

Sign up today, and be pension confident. With PensionBee you can easily combine your old pensions together into one simple online plan. You can see your current pot size, set up regular or one-off contributions, and use our pension calculator to check whether you’re on track to meet your retirement goals.


Figures calculated by LCP, independent pension consultancy, based on the following assumptions:

  • Contribution rates based on automatic enrolment levels (5% employee, 3% employer) on an income of £30,420 (2019 median full-time wage in UK), increasing 2.5% annually
  • Annual pension charge of 0.75%
  • Investment growth of 5% per year
  • Inflation 2.5% per year

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Be pension confident!

Combine your old pension pots into one new online plan. It takes just a few minutes to sign up.

Get started

Mobile PensionBee analytics chart
Mobile PensionBee analytics chart
Apple Store logo Google Store logo