Delay starting a savings plan for seven years and you will double the time required to reach a particular level of retirement income. This has nothing to do with where you invest your money - simply the power of compound interest.
The difference is even more startling if you delay for a longer period.
Consider the experience of Jack and Jill. Jack's parents contribute £1,000 gross to a pension for him each year until his 20th birthday, a total of £20,000. Being a lazy ne'er-do-well, he never subsequently makes a payment himself.
Meanwhile Jill's parents make no contributions for her. She leaves university at age 25 and conscientiously starts saving £2,000 a year for 40 years (twice as long as Jack), a total of £80,000.
The ne'er-do-well comes off best at 65 with a pension pot of £537,000 compared to Jill's pot of £328,000. These totals assume six per cent growth net of charges. We don't know what around half a million will buy in 40 years but it will certainly go a long way towards securing Jack's future.
The earlier start by Jack's parents, even with much smaller amounts and for far fewer years, was too much for Jill to overcome thanks to the tremendous power of compound interest.
That's why it's important to start investing early - whether for yourself or your children or grandchildren - and to add to your savings regularly whether, for example, in an HL Vantage SIPP or a tax-free account such as an HL Vantage ISA.
