5 smart reasons why retirement planning should start in your 30s and 40s

If you’re working and contributing to your pension, you might think you don’t need to do any more retirement planning just yet. However, seeking retirement advice in your 30s and 40s could mean you’re in a better position when you’re ready to give up work.

According to a survey published in IFA Magazine, putting off retirement planning is something many workers are guilty of.

Indeed, it found that just 5% of Brits aged between 35 and 44 had taken financial advice to help them prepare for retirement. Even among older generations, many haven’t sought professional support – only 10% of 45- to 54-year-olds and 21% of those aged over 55 had sought retirement advice.

Here are five smart reasons why you shouldn’t put off planning for retirement, even if the milestone is decades away.

1. A goal could keep you on track

If you’re not sure how much you need to save for the retirement you want, it can be difficult to understand if you’re on track. Setting a goal could motivate you to contribute regularly or even increase how much you’re adding to your pension.

The final goal for your pension can seem like an impossible challenge. Remember, it’s not just your contributions that will support your long-term goals, but often employer contributions, tax relief, and investment growth too. So, understanding how your pension will grow could make your target seem more manageable.

2. Identifying a gap sooner could mean you have more options

When you review your pension alongside your retirement aspirations, you might find there’s a potential shortfall.

The good news is that by identifying the gap in your 30s or 40s, you could have more options. For example, you might adjust your retirement date or planned retirement lifestyle.

Alternatively, with decades until you’re ready to give up work, you could increase your pension contributions to bridge the gap. As your pension is usually invested, increasing contributions sooner could mean a relatively small increase to your regular contributions has a much larger effect on the value of your pension at retirement than you expect.

3. Discover if you’re making the most out of your pension savings

Reviewing your pension now could help you discover ways to get more out of your savings.

To encourage workers to save for the future, you often receive tax relief on your contributions – so, some of the money you’ve paid in Income Tax is added to your pension. In 2024/25, your total tax-relievable contributions, including those of your employer plus tax relief, can equal up to 100% of your annual earnings or a maximum of £60,000; this is known as the “Annual Allowance”.

Your pension provider will typically claim tax relief at the basic rate on your behalf. However, if you’re a higher- or additional-rate taxpayer, you’ll need to complete a self-assessment tax return to claim your full entitlement. You can only claim back tax relief from the last four tax years. As a result, putting off reviewing your pension until you retire could mean you miss out on tax relief.

You should note that if you’re a high earner or have already taken a flexible income from your pension, your Annual Allowance may be lower. Please contact us if you’d like to discuss how much you could add to your pension tax-efficiently.

There could be other ways to boost your pension that you may have overlooked too. For instance, your employer may increase their contributions in line with yours.

4. Review how you invest your pension

Normally, your pension will be invested. This provides your retirement savings with an opportunity to grow.

As you’ll often be investing for decades through a pension, the performance of your investments could have a huge effect on the income you can create later in life. Taking financial advice in your 30s and 40s could offer a valuable chance to check your pension is invested in a way that aligns with your risk profile and goals.

While investment returns cannot be guaranteed, we could also work with you to help you understand how investment returns might provide long-term financial security.

5. You could discover you’re able to retire sooner than expected

If you could retire five years sooner and still be financially secure, would you?

One of the challenges of retirement planning is calculating how much you need to save to be financially secure for the rest of your life. You might worry about running out of money in your later years or not having enough to cover unexpected costs.

An early pension review could highlight that you’re in a better financial position than you expect and give you the confidence to retire sooner.

Contact us if you’d like to talk about your retirement plans

Whether retirement is just around the corner or decades away, we could help you plan for retirement. With a tailored plan, you could find you’re in a better financial position and have more freedom when you’re ready to give up work. Please contact us to arrange a meeting.

Please note:

This blog 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. 

Levels and bases of, and reliefs from, taxation are subject to change and their value will depend upon personal circumstances. Taxation and pension legislation may change in the future.

The value of pensions and any income from them can fall as well as rise. You may not get back the full amount invested.