A lot of people push retirement planning to the side – not because they’re being careless, just because it doesn’t feel urgent. You’re too busy dealing with what’s in front of you.
But starting late isn’t a dealbreaker. You can still use the tax breaks, grow your pot, and give yourself some breathing room later. Doesn’t need to be complicated – just start with whatever you can afford and build from there.
Why pensions often fall behind
When you work for yourself, there’s no employer nudging you to join a pension scheme. That alone makes a big difference. Add in variable income, tax deadlines, and the cost of staying afloat – and it’s easy to see why pension saving drops down the list.
Some sole traders assume they’ll “sort it out later”, or that the sale of their business or property will fund retirement. Others think they’ve left it too late altogether, so they don’t bother starting.
But even small, regular contributions can grow over time – especially when you take tax relief into account.
What pensions give you – even if you’ve left it late
Pensions aren’t magic, but they are built to reward saving – especially if you’re self-employed. Any money you put in gets invested, and you don’t pay tax on the growth.
The best part? You get a tax top-up when you contribute. That’s usually 20%, straight from HMRC. So £100 in becomes £120. If you’re a higher-rate taxpayer, you might be able to claim even more back through Self Assessment.
Plus, pension pots don’t normally count towards your estate for Inheritance Tax. That matters more as you get older, especially if you have assets building up elsewhere. That said, future tax policy could change – for example, there’s been discussion under the new government about including pensions in IHT, so it’s something to watch.
You can take money out from 55 (rising to 57 soon). The first 25% is tax-free, the rest is taxed as income. There’s more to it, but that’s the broad idea.
How to get started from scratch
No need to be an expert. Just start with what feels doable and go from there.
ii SIPP — from £5.99/month
A Which? Recommended pension option for the self-employed — simple, flexible, and low-cost.
Pick a provider with low fees – someone like Interactive Investor (ii), Penfold, PensionBee, or AJ Bell if you want more control. Set up a direct debit. It could be £50 a month, or more. The point is getting the habit in place.
If you have a good trading month, or your tax bill comes in lower than expected, throw in a lump sum before the tax year ends.
You don’t need to move your ISAs or tie up every spare penny. But having some money in a pension wrapper gives you options later.
What if you’re in your 50s or older?
This is usually when people panic. But starting in your 50s isn’t a problem – it just means there’s less room for error.
You might only have 10 or 15 working years left, sure. But that’s still long enough to build a pot. Especially with tax relief doing some of the heavy lifting.
Say you put in £5,000 a year for 10 years. That’s £50,000 in real money, but more like £60,000+ once you factor in growth and top-ups. That’s not nothing – it could give you some breathing room in your 60s.
And if you’re planning to ease out of work gradually, even better. You can keep topping up while taking some money out if needed. Just be careful with drawdown, especially if you have other income coming in – it can get messy tax-wise.
If you’re self-employed or just looking for flexible work in later life, sites like Jooble can help you find roles that suit older workers in London and across the UK. Combining part-time income with small pension contributions could give you both stability and peace of mind as you ease into retirement.
The best thing is to run some numbers using a retirement calculator, or ask your accountant to show you how different options might play out.
What’s the catch?
There are a few things to keep in mind.
You can’t touch the money until age 55, rising to 57 from 2028. So, don’t lock away funds you might need in the short term.
There’s also a limit on how much you can put in each year: £60,000, or 100% of your earnings – whichever is lower. Most people don’t hit that, but if you’re doing a big one-off top-up, check the numbers first.
And if you’ve already started drawing from a pension, you might trigger something called the Money Purchase Annual Allowance. That caps future contributions at £10,000 per year. Worth watching.
No one regrets starting
Everyone says they’ll do it “next year.” Then life gets in the way.
You don’t need to do it perfectly. Just pick a number, start with that, and build as you go. Even £50 a month is better than nothing, and the tax relief adds up fast.
Some people don’t want to deal with another platform. Fair enough. However, most modern providers are easy to use, and some even allow you to view forecasts and adjust contributions with just a couple of clicks.
The point is: you’ll thank yourself later. Starting something is always better than putting it off again.
We recommend you talk to a pension specialist who can provide personalised advice tailored to your specific circumstances and needs. The information on our site should not be used as a substitute for professional advice.