However, the sooner you start making provisions, the more money you are likely to have to enjoy a comfortable retirement.
If you leave it late to set up a private pension plan, you will have to invest large chunks of your salary in order to build up a decent retirement pot.
Starting earlier means you can drip the money in at a slower rate, impacting on your income less but still creating a healthy pension fund.
Setting up a pension
If you are just starting a private pension, you will undoubtedly want to know how much you are likely to end up with in return for your investment.
Because pensions are linked to the performance of a fund, there are no guarantees about the annuity you are likely to receive when you retire. Much depends on the management of the funds, the performance of the stock market over the years the money is invested and the type of funds you opt to invest in.
These type of schemes are often referred to as either 'money purchase' or 'defined contribution' arrangements.
You don't need to be some kind of stock market whizzkid to know where to invest your pension money; you simply need to let the pension provider know whether you prefer to adopt a cautious, balanced or aggressive attitude and they will make the suitable choice.
If you would like more control over where your contributions are invested, a SIPP (self invested personal pension) might be a better option.
Even though it is not possible to say exactly how much you will get when you stop working, you can use a private pension plan calculator to give you an idea how much you will get paid in return for your private pension contribution.
The other factor to bear in mind is that you may well have to pay tax on private pensions income when you retire which can obviously make a significant difference to what you ultimately receive.
One word of warning: private pension schemes are designed as long term investments, meaning you can see fluctuations over the years. In addition, as a general rule, the longer your money is invested, the better chance it has to grow.
What to look out for when you choose a pension provider
Different providers will allow you to contribute in different ways; some will allow only regular contributions while others may allow a mixture of lump sum investments as well as monthly payments.
Each provider will also levy fees against your pension, usually on an annual basis. These can vary quite significantly so it is important to compare private pension plans to see how much you will have to pay.
Stakeholder pensions are a relatively new type of personal pension scheme but the provider has to adhere to certain standards which include restricting the annual charges.
This makes them a very good option for many people, whether you are looking for private pension plans for self employed people or a pension plan for private sector employees.
You can use our pension comparison table to find out about the types of pension schemes available and, if you wish, get advice about the private pension scheme that's likely to be best for you.