Widely regarded as the world’s most successful investor, Warren Buffett can teach the average pension saver a thing or three about investing for the long term.
After 95 years on the planet and 60 of them at the helm of asset management giant Berkshire Hathaway, Buffett has issued his last annual letter to investors before he steps down as CEO at the end of 2025. Nicknamed the Sage of Omaha, after his Nebraskan home, his overriding parting message is simple – lasting wealth is not built in bursts, but patiently over decades.
We look at five ways to invest like Warren Buffett in a separate article.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Many other investors have tried to beat Buffett. But Maike Currie, vice president of personal finance at retirement savings firm PensionBee, said behind his modest farewell is a simple yet powerful lesson for anyone saving into a pension – “compounding works best for those who stay calm, stay invested and think in decades, not days”.
Latest Videos FromMoneyWeek
There are three standout takeaways for long-term savers and soon-to-be-retirees from Buffett’s lifetime of successful investing – longevity, compounding and, for those who can afford it, gifting.
Buffett’s advice to pension investors
1. Longevity – luck and saving
Gratitude for “a huge dose of good luck” features heavily in Buffett’s letter, including in respect of living to the ripe old age of 95.
Few of us are likely to be as lucky to enjoy a Buffett-style career or wealth – Buffett is reportedly worth around $160 billion – but the chances are increasing that we reach his longevity milestone.
Data from The Office for National Statistics for October showed there were 15,330 people aged 100 and over in England and Wales in 2024, up from 14,800 the previous year. The number aged 90 and above also rose sharply to 563,610, while a record 570 people were aged 105 or older.
“We’re living longer than ever before, which is great news, but those extra years mean our retirement savings need to stretch much further than any previous generation,” said Currie.
“The best preparation for the 100-year life is to save steadily and take full advantage of every pension benefit available.”
Starting as young as possible and making regular pension contributions, especially where employers match payments, is an easy win when it comes to future-proofing your finances for a possible 30 year retirement.
Tax relief magnifies the effect: for a basic rate taxpayer, every £80 saved becomes £100 in a pension before any investment growth occurs.
2. Compounding – the most powerful force in investing
Buffett used his letter to warn that Berkshire’s stock price will face 50% drops at times (as has happened three times in the company’s 60 year tenure): “Don’t despair; America will come back and so will Berkshire shares,” he told investors.
The ‘keep calm and stay invested’ message – the classic time in the market versus timing the market adage – has been a mainstay of Buffett’s wisdom. He is known for being a patient investor who likes to buy and hold stocks for a long time, even through inevitable volatility, in order to benefit from the power of compounding through market cycles.
Pensions are uniquely suited to long-term growth, said Currie, as “the ultimate long-term compounder, where even modest, consistent contributions can grow substantially over time”.
“Markets will rise and fall, but staying invested is what allows compounding to work its quiet magic.”
3. Gifting – the great intergenerational wealth transfer
Gifting is the final big theme in Buffett’s letter. Buffett is increasing the pace of donations to his children’s foundations while they are “at their prime in respect to experience and wisdom”.
He makes the point that he trusts his children’s judgment and reassures them in the letter that they do not need to “perform miracles nor fear failures or disappointments”. He says: “Ruling from the grave does not have a great record, and I have never had an urge to do so.”
Empower others, don’t over-engineer, has always been part of Buffett’s investing philosophy and it has now become a key part of his legacy of handing over the reins both in terms of money and power.
“It’s a reminder that wealth transfer, whether through gifts or inheritances, works best when guided by trust and clear intent, not control,” said Currie.
With potential changes to the UK’s inheritance tax rules on the horizon – including around the seven year rule – it may make sense to use current gifting allowances while you can, she added. “Thoughtful estate planning is as valuable to families as Buffett’s sage advice is to investors.”
The Oracle of Omaha reminds us that compounding, prudence and patience still work, even in volatile times. “The message is simple but powerful,” said Currie – “keep calm, carry on, keep saving, stay invested and let time do the heavy lifting”.
