5 great reasons why it’s never too late to start thinking about your retirement plan

To paraphrase an old saying: “The best time to start planning for your retirement was 10 years ago. The next best time is now.”

If you’ve not started to think carefully about your post-work life yet, you’re not alone. Indeed, PensionsAge reveals that it’s only after the age of 36 that many people actively start to consider their retirement plan.

While it is often beneficial to start retirement planning early, there are still plenty of positive steps you can take later in life. Continue reading to discover five ways to bolster your fund, and how a financial planner could offer some much-needed support along the way.

1. While compounding growth is more effective early, it’s never too late to start benefiting

Albert Einstein once famously remarked that compounding growth was the “eighth wonder of the world”. Whether this is true or not, the benefits of compounding growth are undeniable.

Compounding growth essentially means that the earlier you start contributing to your pension, the more time you give your wealth to snowball and accumulate. Nest provides a compelling example of this.

Imagine two people start saving £200 each month into their pension, including tax relief and employer contributions.

Both people pay into their pension for 10 years, totalling £24,000 in contributions. The difference is that Person One makes contributions between the ages of 22 and 32, while Person Two makes theirs between 32 and 42.

Assuming yearly growth of 5% (net of any charges) until age 60, Person One would have nearly £125,000 saved, while Person Two would only have £77,000.

Even though both people saved the same amount overall, compounding growth over time means that the person who started saving earlier would have more in their fund when they eventually retire.

While the effects of compounding returns increase with time, you will still notice the benefit if you start saving into a pension later in life.

If you’re not sure how much to contribute to achieve the retirement fund you want, your financial planner can help you to establish some savings goals and work out how much you may need to save.

2. You can benefit from tax relief on pension contributions

Perhaps one of the most significant benefits of saving in a pension is that you receive tax relief on contributions at your marginal rate. You’ll only receive tax relief on personal pension contributions up to 100% of your UK earnings, or £3,600 if this is greater (for example, if you’re a low or non-earner).

Usually, you will receive basic-rate tax relief automatically. If you’re a higher- or additional-rate taxpayer, you can claim further tax relief of 20% or 25% through your self-assessment tax return.

Regardless of your age, contributing to your pension may still be worthwhile, as you qualify for tax relief until the age of 75.

Please note your pension contributions, including any made by your employer, are also limited by the Annual Allowance which is currently £60,000 each tax year for most people. If you’ve already taken money out of a pension, or you’re a higher earner, your Annual Allowance could be much lower.

A financial planner can help to ensure you’re claiming all the tax relief you’re entitled to.

3. You could purchase additional credits towards your State Pension

The State Pension can form the bedrock of your retirement income, providing a helpful foundation that your private pensions and other savings can build upon.  

As of 2024/25, the new full State Pension is £221.20 a week, but you’ll need a certain number of “qualifying years” to receive it.

You can accrue these by making National Insurance contributions (NICs). You need at least 10 qualifying years to receive any State Pension at all, or 35 years for the full amount. It’s also worth remembering that you could accrue a qualifying year when you receive certain benefits, such as if you’re off work with an illness or caring for someone.

If you discover that you have some gaps in your NI record, you can purchase additional credits. Money Saving Expert reveals that this could give your State Pension a considerable boost. A full year of voluntary NICs usually costs £824 and adds up to £302.64 each year to your pre-tax State Pension.

It’s important to note that purchasing National Insurance credits isn’t a one-size-fits-all solution, so it’s worth consulting your financial planner first. They will examine your specific circumstances and advise you whether it would be the right move for you.

4. You may have lost pension pots that you could rediscover

Even though starting to plan your retirement later in life can seem like an uphill battle, it’s worth considering that you may have pension savings from earlier in your life that you have simply lost track of.

This is especially true if you’ve held various jobs throughout your career. Aviva reports that an estimated £26.6 billion could be sitting in lost pension wealth, and that the average lost pension pot could be worth around £9,500.

If you’re concerned about not having saved enough, you may have more tucked away than you initially thought. To make the most of this, you’ll need to track down any “lost” pots.

A helpful first step to locating your forgotten pension pots is getting in touch with your old providers (if you know who they were). If not, contact your former employers who may be able to put you in touch.

Providers will usually send an annual benefit statement, so it’s prudent to look through your files and gather any documents or emails pertaining to your old pensions. Alternatively, you could use the government’s Pension Tracing Service to locate the details of your previous providers.

If you’d like to take the hassle out of tracking down your forgotten pension pots, you could also seek the help of a financial planner, who can help you to locate your old wealth and provide advice on how best to use these savings towards your retirement goals.  

5. Use property wealth

If you don’t believe you’ll have enough time to generate the pension fund you need through contributions, your financial planner can help you to consider other options that may be right for you.

For example, “downsizing” could help you to access some of the value tied up in your home. This could potentially generate a significant sum to boost your retirement income.

If you’re deeply attached to your home and don’t want to move, you could also consider equity release. This enables you to withdraw tax-free cash from the value of your home as a lump sum or a series of smaller payments.

The most suitable strategy for you will depend on your lifestyle requirements and your personal goals, which is why consulting with a financial planner is invaluable.

They can assess your current situation and offer bespoke retirement advice that aligns perfectly with your needs and aspirations.

Get in touch

If you’re still concerned that you’ve left retirement saving too late, we can help you create a plan to save towards your ideal lifestyle in the next phase of your life.

Email theteam@fortitudefp.co.uk or call us on 01327 354321 to find out more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.