Savers have been urged to "strike a balance" on short- and long-term financial commitments amid the cost-of-living crisis, after resarch from Standard Life found that those starting pension saving at age 22 could have £112,000 more at retirement than those starting at 27.

The analysis showed that someone earning £23,000 per year and paying standard monthly auto-enrolment contributions from the age of 22 would have a total retirement fund of £424,618 by age 68.

In contrast, some waiting until 27 to start contributing to a pension could expect a total pension pot of £312,266, over £112,000 less.

Standard Life also showed that the disparity grew even more the later pension savings started, as those saving at 32 could expect £226,707 at age 68, £197,911 less than starting at 22.

Those starting at 37 could expect to save £160,319 (£264,298 less), while starting at 42 would give £108,860 (£315,758 less), and starting at 47 would give £70,640 (£353,978 less).

The company explained that this disparity is due to the impact of compound interest, explaining that starting a pension earlier in life will allow compound interest to build each year, meaning those who start saving later on will not generally benefit to the same extent.

Standard Life managing director for customer savings and investments, Jenny Holt, commented: “It’s amazing to see how just a five-year delay in saving in your 20s can significantly reduce the pension you retire on by tens of thousands of pounds.”

Holt acknowledged that times may be tough at the moment in the context of the cost-of-living crisis and it may be tempting to think about putting off the long-term financial future and purely focus on the short term.

However, she argued that, if finances permit, it is best for savers to engage with their pension earlier.

“The longer you wait to start the worse off you could be by the time you stop working, so if you’re able to save into a pension your future self is likely to thank you for it,” she continued.

Industry experts have previously raised concerns over the impact of the cost-of-living crisis on pension saving trends, pointing out that while pausing or reducing contributions can have a significant impact for savers, there are other priorities that savers will need to consider in light of rising prices.

Indeed, commenting in response to research from B&CE published today (31 August), the Pensions and Lifetime Savings Association (PLSA) warned that "during a time of fast rising energy and food bills, for most savers there are far more immediate financial concerns than pensions".

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