Standard Life analysis has show that early pension saving widens your options when it comes to deciding when to retire.

The retirement firm looked at four scenarios to determine the savings outcome of an individual on typical earnings saving through the workplace:

• The Long-term Saver, saves from 22-66 on a starting salary of £25,000
• The Early Start, Early Finisher, saves from 22-55 on a starting salary of £25,000
• The Late Start, Early Finisher, saves from 40-55 whose salary at 40 is £46,500
• The Catch-Up Saver, savers from 40-66 whose salary at 40 is £46,500

(These figures assume 3.50% salary growth per year, and 5% a year investment growth; they have not been reduced to take effect of inflation. Annual Management Charge of 1% assumed.)

The analysis shows that the Long-Term Saver could accumulate £435,000 by age 66, not taking inflation into account. This assumes 3.5% salary growth per year and the standard auto-enrolment contributions (3% employee, 5% employer). By contrast the Catch-Up Saver could accumulate £247,000. While their salary level will by higher at age 40, they would need to make significantly higher contributions in order to catch the Long-Term Saver who benefits from additional years of contributions and investment growth on their pension. Indeed, for the Catch-Up Saver to build £435,000 by 66, their contribution level would need to be 14% of their salary.

Standard Life’s analysis also looked at the impact for those who choose to retire early at the current minimum pension age of 55. Those who saved from 22-55 could generate a fund of £218,000 while those who start at 40 and finish at 55 could have £95,300.

Dean Butler, managing director for customer at Standard Life, said: “It’s never too late to start saving and these figures illustrate that even over 15 years, people can accumulate significant sums in their pension which benefit from employer contributions and tax relief. That said, what stands out is that the earlier you start, the greater your options.

“Over the years the combination of contributions and compound investment growth can really add up. If you are going to start saving later then it’s important to think carefully about contributions and what the standard auto-enrolment levels will generate in retirement.”