One of the most common questions I see asked online through out many financial based forums is at what age and how much someone should start saving for their retirement. Typically such threads will attract a wide range of responses which go from the prudent “half your age as a percentage” rule right up to the inevitable “don’t bother because the government will steal it all away” type responses. Although I especially enjoy reading many of the conspiracy theories around pensions being pointless and completely illogical arguments that you may as well enjoy yourself now because you’ll be working until you die.. It’s important that at least some meaningful message is able to get through.

The truth is that it’s a very difficult question to answer in pure financial terms as everyone’s situations are different and we each have differing personal aspirations. While hopefully many readers of this blog would like to retire early and enjoy their copious amounts of free time.. I’ve no doubt there are many more out there who would rather splash out on lavish holidays with the knowledge they will end up working until 70. However the important thing to remember is that you should save something and start doing so now.

All too often I see people trying to justify their lack of retirement saving as having more important things to save for. Infact I recently stumbled upon a fantastic cartoon which nicely illustrates the point:

In your 20s the priorities are almost always housing and transport. Saving for the house deposit and paying off your first car, pensions are a distant thought. Something to worry about when you’re much older because you’re too busy getting onto the housing ladder and enjoying life.

30s come along and typically deliver children. New cots, toys, clothes and mountains of other requirements. Plus maybe a bigger car to transport the increased family around and if you’re unlucky: a house move as the previous 1-bedroomed flat isn’t going to cut it.

Before long you hit the 40s, earning a decent salary but now with teenagers who are demanding the latest gadgets and fancy holidays. You really ought to start thinking about that pension but the state retirement age is still 25 years away…

50s hit and it’s university fee time. Perhaps some grand children will come along or maybe you’ll move into that dream detached house in the countryside. By now you know you need a pension but with only 15 years left of work you’d need to put in a huge chunk of your income each month just to maintain your living style in retirement.

60s, retirement time. Children have flown the nest and you might be able to down-size your house. But will it be enough to fund your retirement? Suddenly you’re dropping from a £60k annual income to £15k. How will you fund the 4 holidays a year and 2 weekly restaurant meals you’ve grown accustomed to?

Throughout all of this, the same message appears again and again: Other things need saving for, other things need spending on. By starting your retirement saving early, you can benefit from the long investment time and compounding returns. A small regular financial sacrifice now will likely generate far greater returns than a huge sacrifice later on in life. It doesn’t have to be into a pension either. Paying off the mortgage, putting it into ISAs, getting a buy-to-let or even just saving the cash will contribute towards eventual retirement. The most important thing is to do something now.

What age did you start saving for your retirement? Do you think it was the right age to do so or do you wish you’d begun earlier? Perhaps you’ve not started yet as its something to worry about later on?