The world of work is changing, and it means young workers today need to be more engaged with their pension than ever to build a secure retirement. A rising State Pension Age, frequent job switches and more options for individuals to manage their own pensions present new challenges for 20-somethings.

It wasn’t too long ago that a job for life was the norm. Half of people in their 60s say they spent over 20 years with the same employer, according to research from Aegon. However, ask 20-somethings how long they expect to work for the same employer, and it highlights a significant change in today’s employment: Half (52%) of workers in their 20s said the longest period they expect to stay with an employer is five years.

Job switching has become a common way to learn new skills and get ahead in a career. While this approach could help younger workers progress, it could also leave them with a challenge when they retire, as they’ll now have multiple pensions to manage.

What’s more, the State Pension Age is rising, and many young workers are facing short-term financial challenges, such as saving a deposit to buy their first home. Engagement with retirement planning now could help younger generations secure the retirement lifestyle they want. The good news is that it’s something many are already thinking about.

If you’re a young worker, here are five things you should be doing to build your retirement now.

1. Keep track of your pensions

The biggest retirement challenge presented by frequent job switching is how many pensions you could end up with. In most cases, employers must automatically enrol you into a workplace pension. If you’re changing employer frequently, it’s easy to lose touch with some of these savings.

Keep the paperwork for all of your pensions and regularly check how they’re performing. Losing a pension could have a huge impact on the type of retirement lifestyle you can afford and cause financial headaches when you do retire.

In some cases, consolidating pensions can make sense. Not only could this make it easier to manage your retirement savings, but it could reduce the amount you pay in pension fees.

2. Make use of a workplace pension

When the Aegon research asked workers in their 20s how they plan to fund retirement, they expect just 32% of their income to come from workplace pensions and 31% to come from their own savings and investments.

Personal savings and investments can be a useful way to build a retirement fund. However, pensions are often the most efficient way to save for retirement. This is because you will benefit from tax relief, providing an instant boost to your contributions, and, in most cases, your employer must contribute too. Effectively you get “free money” when paying into a pension. If you’re currently saving and investing with retirement in mind, choosing a pension could make more sense.

3. Check when you’ll be eligible for the State Pension

As well as personal savings and workplace pensions, those in their 20s expect the State Pension to provide 37% of their retirement income.

Relying on the State Pension could have a significant impact on when workers will be able to retire. The State Pension Age will reach 67 by 2028 and is under constant review. It’s likely that a range of factors, including changes in life expectancy, will mean it continues to rise. As a result, 20-somethings, with decades of work still ahead of them, could be well into their 70s before they can claim the State Pension. If you want to retire before the State Pension Age, it’s important to plan how you’ll afford it.

4. Make long-term saving a priority

Balancing short- and long-term saving can be a challenge.

The obstacles younger generations face when trying to get on the property ladder are well known, and you may face other challenges too. While this can put some people off saving for retirement, this approach could cost you a retirement you can look forward to.

Pensions are typically invested and, as you can’t access the money until you reach pension age at 55 (rising to 57 in 2028), investment returns are reinvested. This means you benefit from the effects of compounding. Over the long-term, compounding can be valuable and grow your savings much quicker.

Leave it too late, and you may need to make large contributions to your pension to meet your financial goals. But start a pension now and you could achieve the same sum with lower regular contributions.

5. Set out a plan for what you want retirement to look like

Imagining what you’d like retirement to look like can help you stay motivated and ensure you’re on track to meet your goals. When would you like to retire? And what do you see yourself doing in retirement? Retirement might be some way off, but by thinking now about the lifestyle you want later, you’ll be in a much better position to achieve it.

It’s never too early to start thinking about your pension and retirement plans. Taking steps to plan in your 20s means you’re far more likely to reach your goals in retirement.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.