Savers are being urged to seek advice as a new study shows how early decisions can significantly affect the amount of income received at retirement.
Those who fail to maximise their use of auto-enrolment could end up thousands of pounds a year worse off in retirement, for example, the Royal London study has found.
The provider conducted a series of case studies across age groups and income levels to see how defined contribution savings choices are affecting retirement outcomes.
The provider has urged savers to get advice and guidance on their options, as two-thirds looks set for a significantly worse standard of living when they hit retirement.
Analysing one case study, Royal London projected that a family aged 30, which decided to opt out of auto-enrolment in 2019 when employee contributions hit 5 per cent, would see a 69 per cent fall in private pension income if they did not resume saving.
By comparison, a £1,600 increase in annual employee contributions for another case study would generate nearly £7,000 more income in retirement if the employer matched these.
The results also spell a warning for the self-employed if they never fall under auto-enrolment, as they could expect a £3,800 reduction in annual income compared to an employee with identical pre-retirement income.
Nearly half of the cases assess are expected to be reliant on the state pension to fund part of their essential spending.
Strategic insight manager at Royal London Ronnie Morgan says: “Regularly reviewing workplace pension contributions and increasing them ‘little and often’ is a far better strategy than hoping to make up for a lifetime of under-saving close to retirement.
“This research shows very clearly how many people could be heading for disappointment in retirement unless they get the advice and guidance that they need to make good financial decisions throughout their working lives.”