Focusing consistently on career advancement could have a "significant" impact on a person's pension outcomes, Standard Life has suggested after its research found that varying career strategies could lead to differences of as much as £80,000 (38 per cent).

The firm’s calculations found that those who start work at age 22 on a salary of £25,000 per year and make the minimum monthly auto-enrolment contributions (5 per cent employee, 3 per cent employer) could build a pension pot of £210,000 by the age of 68 if their salary grows at a moderate rate of 3.5 per cent annually. This is adjusted for 2 per cent inflation a year.

However, those who pursue accelerated career growth and receive an average salary increase of 5 per cent, could see their retirement fund grow to £290,000, significantly improving their financial position later in life.

Despite this, the firm pointed out that pensions are a long-term investment, suggesting that someone with relatively modest salary growth from working in a fulfilling job for longer would be likely to end up with more in their pension pot compared to someone who made quick moves up the career ladder but then felt the need to retire earlier.

Indeed, Standard Life’s analysis found that someone with a 5 per cent annual salary growth who retired at 58 could end up with a pension pot of £176,000, £34,000 less than if they retired at 68.

Given this, Standard Life managing director for retail direct, Dean Butler, said that there is a “real” conversation taking place about how younger generations are adjusting to the workplace after the pandemic.

Butler said that, as some employers scale back remote work, these individuals are trying to find a balance between their career goals and their need to focus on personal health and wellbeing.

He also suggested despite being a long way off, these different approaches have the potential to impact Gen Z’s retirement savings too.

“Some people are fully ‘locked in’, focusing on the task at hand with ambition for quick salary growth and promotions,” he continued.

“Others are putting emphasis on their life outside of work and perhaps avoiding management responsibilities or additional tasks.”

He stressed that neither method was inherently correct or incorrect, and both could potentially offer savers a satisfactory pension.

However, he warned that if people stay too focused on the task at hand while prioritising career progression and maximising their salary, they could burn themselves out by the age of 40.

Butler explained that choices made now can have a surprisingly “significant” impact further down the line and long-term financial prospects could take a hit.

“The ideal scenario must be to find a work/life balance that works for you while keeping an eye on your financial future,” he stressed.

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