People born after 1979 warned over having £75,000 wiped from their pension pot

UK households have been warned over £75,000 being wiped from their pension pot due to a "perfect storm". Under the new Labour Party government, a round 60 per cent of UK adults lack confidence in their retirement prospects, it has been found.

This is highlighting a growing crisis in pension planning, experts have warned. The financial impact of delaying retirement savings can be costly, with research showing a potential £72,644 difference in pension pot size based on starting age.

Someone starting to save £100 monthly from age 25 could accumulate approximately £159,818 by the age of 65, assuming a five per cent investment return. But waiting until age 45 - born in 1979 or later - and contributing £200 monthly would result in just £87,174 by retirement age.

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Andrew Tully, Technical Services Director at Nucleus, said: "One message that comes through loud and clear from our findings is that people need to start planning and saving for later life much, much earlier. Its certainly what our over-50s would tell their younger selves and hopefully what they are telling their children and grandchildren.

"But while the desire is there, many people don't seem to know where to begin and are finding it difficult to think about the longer-term when they have other more immediate problems to contend with. Part of that is due to a lack of understanding, which shows a real need for better financial education to put adults on a good footing."

Tully warned of a "perfect storm" facing future retirees, with people potentially underestimating both their financial needs and longevity. He said: "The road to a financially secure retirement is paved by making the right choices at the right times. We need to help lay the foundations, so people are ready to take the first step.

"With people potentially underestimating how much they will need, not appreciating how long they might need it for and not saving anywhere near enough, future retirees could be facing a perfect storm. Its in all our interests to get the message out there: when it comes to retirement planning, if you didn't start yesterday, then today is the next best day."