When you’re in your early 20s retirement might feel like a long way off. But it’s never too early to start saving for it. In fact, it’s key to giving yourself options later in life.

Having a savings plan for every stage of your life is vital in helping you work towards a retirement that you can look forward to. Saving habits or priorities can change at different times in your life, so it’s ok to dial up or down focus as you go. To help, here’s our decade-by-decade guide to saving for the future.

In your 20s: getting started

It’s important to begin good savings habits and proactively engage with your finances as soon as you start earning money. The more you can do earlier in life, the more valuable it will be when you need it later. But it’s important to get the balance right between always saving for tomorrow and depriving yourself of enjoyment today. Here are a few things that can help:

• Try to budget for saving for your future, rather than attempting to save whatever’s left at the end of the month. Whether it’s buying a house or starting to think about retirement, even small yet regular amounts going into your savings pot will eventually grow into something more substantial.
• Take advantage of savings options like tax-efficient ISAs and Lifetime ISAs. These options could help you save even faster for shorter-term milestones in your 20s and 30s, such as your first property or significant life event like a wedding. Then you can move your focus to saving for retirement before it’s too late.
• Make sure you take advantage of any workplace pension schemes available to you. Most employees will be auto-enrolled into a workplace pension, and generally employers have to contribute at least a minimum amount, with some making more generous contributions. These contributions, and the tax relief you get on your own contributions, are essentially free money and could help you kick-start your pension without much effort. So if you have one, make sure you make the most of your workplace pension – you’ll thank yourself later.

In your 30s and 40s: dialling up focus

This time in your life could be one of the more financially rewarding parts of your career But it’s also a time when you could be facing financial pressures from other areas, such as starting a family. So it’s important to get the balance right.

You might want to consider salary sacrifice to maximise your payments into your pension. This is where you can agree to reduce your salary each month and redirect it instead into your pension. As well as paying more into your pension, your take-home pay could actually be higher as you’ll be paying lower National Insurance contributions.

Redirecting any bonus payments into your pension is another tax-efficient way to boost your future retirement pot. This is because you don’t pay any tax on pension contributions, whereas if you took the money as cash, you’d pay income tax on it.

This could also be a good time to get financial advice, especially if you’re not sure how much money you’re going to need in retirement. There’s not a generic one-size-fits-all approach as everyone’s situation is unique.

But an adviser can help make sure your finances are in order so you can head towards a comfortable retirement. There are also some good online guides that can help, like Money Helper’s retirement checklist. Remember though, although you’ll have to pay for professional advice, it will be specific to you and tailored to your circumstances.

In your 50s and 60s: the last stretch

Now’s the time to really start thinking about when you could retire and start reaping the benefits of the saving and planning that you’ve been doing throughout your life.

You could use a retirement calculator or online guides to help you determine how close you are to being able to retire.

Currently you can start taking money from your pension at 55, although this is likely to increase in the future. You should also think carefully about whether you really need to take any money at this stage as there could be tax implications involved if you’re still paying into your pension. Plus, you should make sure that you have enough money to last throughout your retirement years, so try not to dip into it too soon.

The Government’s free State Pension forecast tool lets you see what you can expect to get from the state pension too, and when. State pension age is currently 66, but exactly when you’ll start receiving it depends on when you were born as it’s likely to rise in the future.

As you approach the home-straight, try to top up your pension as much as you can before you stop earning a regular income. And don’t worry if you think you might need to continue some sort of work in retirement – you wouldn’t be alone. Our research into 2022 retirees shows that 66% plan to continue to work in some form in retirement and that a ‘flexi-retirement’ approach is becoming more and more common.

How abrdn can help you with your retirement

Our financial planning and advice services can support you with everything you need when it comes to retirement planning. Find out more here.

The information in this article should not be regarded as financial advice. Information is based on our understanding in December 2022. Tax rules can always change in the future. Your own circumstances and where you live in the UK could have an impact on tax treatment. The value of investments can go down as well as up, and could be worth less than was paid in.