A third of adults put off financial decisions for a year. Here’s the staggering cost it could have

New research shows a large number of British adults are putting off making big money-related decisions, leading to both emotional and financial turmoil.

Two major money platforms have both released research highlighting how much it can cost to fail to engage with financial matters.

A big mental health concern is shown up in more than 13m people (41 per cent) reporting stress, anxiety or missed financial opportunities as a result of worrying over and delaying money decisions, as calculated by St. James’ Place, with over a third (36 per cent) claiming to have spent a year or more weighing up a financial decision.

And in monetary terms, the cost of delaying engaging in finances over a much longer period of time has also been highlighted by recent research from interactive investor.

Their data show that someone delaying actively engaging with their pension until the age of 36 could miss out on more than half a million pounds in retirement savings, compared with someone who starts building their contributions from age 22.

Age 36 is the average age that a British person starts to actively take part in their retirement savings, according to ii. That could be through opening a Self-Invested Personal Pension (SIPP), by upping their salary sacrifice contributions to a workplace pension or just generally managing their retirement options.

An example given by ii shows that a 22-year-old who starts contributing 5 per cent of their salary to a pension increases this by 1 per cent every five years until they hit 10 per cent at age 47 and then stays at that level until retirement, could amass £525,000 more in their pension than a worker who opted out of contributions until age 36, then took the standard 5 per cent of their own salary and 3 per cent from their employer, through to retirement.

It might be an example of extremes, but it showcases the huge difference that tiny tweaks across years - and starting over a decade earlier - can make.

Even just doing the standard contribution of 5 per cent plus an employer’s 3 per cent from age 22 to retirement would save £300,000 more, compared to starting that same approach at 36.

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Camilla Esmund, head of investor campaigns at ii, said: “With some discussion around younger workers opting out of their workplace pensions, we wanted to illustrate the impact of this, and why – if it makes sense for you financially – staying invested could pay off over the long-term. We’re not saying that everyone in their early twenties needs to suddenly find large amounts of extra money to put into a pension - this is unrealistic for many.

“But we want people to feel encouraged that even small changes can make a difference over a lifetime of saving. The key is that being more aware of your savings early, tweaking your contributions, and exploring other ways to save when you can will put you on a much better footing than delaying a decade or two.”

Mark FitzPatrick, CEO of St. James’s Place, added: “Taking time over important financial decisions is often the right thing to do, but there is a point where careful consideration can become costly delay.

“It's particularly striking that younger adults are more likely to spend a year or longer weighing up financial decisions. They face different financial challenges from their parents' generation, while also taking greater responsibility for funding their own futures. It's understandable that this can create uncertainty about the right decisions to make, but when it comes to saving and investing, time can be one of our greatest assets.”

Meanwhile, a separate survey from wealth planning firm Lifetime showed nearly nine in ten respondents saying money worries have impacted them, either through loss of sleep, stress, strain on relationships or impacting their performance at work.

The survey also highlights one in four Brits lying to a family member about money and more than two in five (42 per cent) who have avoided getting financial advice out of embarrassment or simply not knowing where to start.