Couples without children could accumulate an additional £351,000 in their pension pots by diverting the funds typically spent on raising a child into retirement savings, new analysis from Standard Life indicates.
Research from the Child Poverty Action Group estimates that the cost of raising a child until age 18 is approximately £250,000 per couple. When spread over 18 years, this amounts to an annual cost of around £13,900.
According to Standard Life's calculations, if an individual contributed an extra £13,900 annually to their pension from age 30 for 18 years, their pension pot could reach approximately £603,000 by age 68. This figure represents a substantial increase compared to an individual who began saving at age 22 with a £30,000 salary and contributed only the minimum auto-enrolment amounts throughout their career. These minimums are typically 5% from the employee and 3% from the employer.
Even contributing half of the estimated child-rearing cost, approximately £6,950 per year, could significantly impact retirement savings. Standard Life calculations suggest this could add £175,500 to a retirement fund, potentially resulting in a total savings pot of around £428,000 by age 68, after accounting for inflation.
Emma Furlonger, managing director for workplace pensions at Standard Life, commented that periods of greater budget flexibility for couples without children can be leveraged for increased saving. "It might not be realistic to put the full equivalent cost of raising a child into their pension every year, but these figures show just how powerful additional saving can be when you give it time to grow," she stated.
Parents can also explore opportunities to increase their pension contributions during specific life stages. Furlonger advised that consistent, smaller increases, such as after a pay rise, debt clearance, or when disposable income rises, can make a meaningful difference over a working lifetime, contributing to greater financial security in later life.
Recent research from pension consolidation service PensionBee indicates that many individuals are pessimistic about their retirement prospects. The study found that people in their late 40s and 50s are particularly concerned, with one in ten unable to envision life after work. Approximately half of this age group admitted they did not seriously consider their pensions until well into their 40s, feeling they had left retirement planning too late.
The PensionBee research identified 'Generation X' (aged 45-60) as the most likely to be under-saving for retirement. This generation has faced the decline of final salary pensions, later auto-enrolment, economic downturns, and the financial pressures of supporting both children and aging parents, which may have pushed their own retirement planning down the priority list. Among those who felt they started too late, 40% cited affordability as the reason, while 18% were unsure where to begin.