Delaying pension contributions can cost thousands

Legal & General has calculated the full cost of delaying pension contributions, revealing how important it is that people start saving for income in retirement as early as possible.

New figures from Legal & General show that to achieve a pension income at age 60 of £20,000 a year starting today at age 25, requires monthly premiums of £205. However, delaying paying into a pension until age 35 means that monthly payments have to more than double to £423. Adding up the contributions payable over the working lifetime reveals the full cost to have risen by £40,000 as a result of this delay.

Legal & General is therefore urging people to look at investing in a pension as soon as possible to avoid an expensive cost of delay.

Adrian Boulding, Wealth Policy Director, Legal & General said: "When you are 25 or 30, retirement seems like a long time away but if people begin to save even a relatively modest amount they can look forward to a much more comfortable retirement. Funding your pensions can be expensive as you may live a long time after you retire. By starting your pension early you can reduce the risk of having to pay larger sums in later years, just to retain a reasonable quality of life. "

"During the past 12 months the cost of basics such as food, petrol and utility bills has dramatically increased. But with household budgets feeling squeezed, there is a danger that pension contributions might be delayed or suspended as people focus on the short term rather than the long term to ease the cost of everyday living. However, delaying your pension contributions can be very expensive."

Continues Adrian " I can't stress highly enough that the early contributions are the most valuable ones, as they enjoy the longest period of investment growth."