When should I start saving for retirement?

When should I start saving for retirement?


It might seem strange in your 20s to start thinking about building your retirement pot, but in reality, the earlier you start the better.


Here’s why:


The power of compound interest means that small and regular savings throughout your 20s can serve you handsomely in your retirement.


Compound interest example:

$1 saved on your 20th birthday will grow into $5.84 on your 65th 

$1 saved on your 55th birthday will grow into $1.48 on your 65th 

At an assumed annualised growth rate of 4% 


So, whilst you may be commanding your highest salary at age 55, the savings you make at the start of your career will go much further if invested successfully.


What retirement costs do I need to save for?


The answer to this question is different for everyone. Some people have lavish dreams of sailing around the Caribbean on a yacht, whilst others envisage a life filled with gardening and bingo. Whatever your desires you need to make sure you start planning early, to ensure your dreams become a reality.

Despite the vast differences in peoples retirement objectives, there are common costs which need to be budgeted for irrespective of whether you are on a yacht in Barbados or digging for potatoes in an allotment in Devon.  


Depending on where you plan to live in retirement, health care can be very expensive. In your old age visits to the doctor normally increase so having a budget to pay for your healthcare costs is essential for living comfortably in your elder years.

Living costs

Basic living costs continuously increase at around 3% in the developed world due to inflation. For most, their basic state pension does not cover these costs in full and depending on the lifestyle you want to lead, it may not even come close.

Inflation example 

Let’s say you would like an income of $40,000 per year in today’s money. 

And you are retiring in 20 years. 

Taking inflation into account you will need an income of $72,244 to enjoy the same standard of living. 

Helping your family financially and legacy planning

Many retirees want to be able to gift portions of their wealth to their family. This can be in the form of helping with a deposit on a house to paying school fees for grandchildren, whatever the case, this cost should be addressed.


Having the ability to travel is high up on many people’s list. With the world becoming increasingly globalised, many of our family and friends are being spread to all corners of the world.

People are living a lot longer!

Gone are the days when the majority of people would leave the factory at 55 and die aged 60. In fact, many people are living for a long time past their 80’s. Which is great! If… You can afford it.

Unfortunately, there is a growing trend of people living longer without sufficient savings in place which is leading to vast numbers of older generations living in financial hardship. As such, we see a growing imbalance between those contributing to the social security system and those drawing from it.

Have I left it too long?

Whatever stage of your life you are at, it is important to remember it is never too late to start saving, but the longer you do wait, the harder the task will be to reach your retirement objective.


Start saving in a way that suits your needs.

About us

deVere Insights is a proud component of the deVere Group. Our company has always prided itself on leading the way in the sphere of wealth management. This website is in place to share information and expertise.

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