The government has recently brought forward changes to the state pension age, affecting those born between 1970 and 1978. Although saving early into a pension is likely to give you a bigger pot because of the effects of compounding, Fidelity’s research shows that a 45-year old starting from scratch can still build a pot worth £116,305 by the time they retire at 68.

The research assumed an individual earning the current average salary for the 40-49 age group of £31,122 a year and making monthly contributions starting at £168.31. The real cost would be far lower because this contribution includes tax relief and their employer’s contribution – £84.16 a month from take home pay.

A pot of £116,305 would generate an annual income of £4,071 if taken at a rate of 3.5% a year. Assuming that the state pension rises in line with earnings at 3%, this would represent a 25% annual income boost to the £16,374 received from the state pension.

Ed Monk, associate director for personal investing at Fidelity International, said, “Traditional pension messaging is not generally inspiring for this group of people creating a sense that unless you started saving in the womb, you probably now face a retirement eating dog food. So, looking at these sorts of figures really matter because it demonstrates that even starting today or in the near future, you can use your workplace pension to get free money from your employer, tax relief and generate a pot that is worth having.

“And it doesn’t need to cost an arm and a leg. Saving this amount is plausible from sources that don’t involve giving up something you love…Whatever you do, just don’t think that it’s either too late or not worth it.”

Saving £168.31 a month at different ages:

See YourMoney.com’s ‘I’m approaching retirement, is it worth auto-enrolling?’ to find out more.