You need a £260k pot for happy retirement

Warning to build ‘pension mountain’

WORKERS need to build up a “pension mountain” of £260,000 for a comfortable retirement, a new report suggests.

Royal London based its figures on an average earner on just under £27,000 per year retiring at age 65 and getting a full state pension of about £8,500 per year.

A pension worth £9,000 a year would give them a desired retirement income of £17,500 for around 30 years.

Royal London personal finance specialist Helen Morrissey said: “This is a reminder that when we save for retirement we are chasing a moving target.

“If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build up a much bigger pot than in the past.”

The report said the “pension mountain” has grown 75% since 2002-03, when an average earner needed £150,000 to retire comfortably. It said people whose

THIS latest research spells out just how important it is for people to start saving as soon as they start work to give them the best possible chance of a financially secure retirement.

That way you can start by putting away smaller amounts that will have a lifetime of combined pension income equates to around two-thirds of their gross salary before they retired should not experience a big change in their standard of living “as a broad rule of thumb”.

A worker would need to put away £370 per month from the age of 25 to achieve a £260,000 pension pot. But those who leave it until they are 35 to start saving would need to put away a hefty £546 per month.

The figures include pension contributions put in by their employer.

Royal London’s report also warned falling levels of home ownership will mean a third of younger people will need a pension worth £445,000 when they retire because they will have to factor in rent payments.

your boss chips in and you receive tax relief, is vital.

If you opt-out, you’re turning down the equivalent of free extra cash from your employer.

But the minimum amount being saved by workers and bosses needs to rise even higher than the planned increase from the current 5% of earnings to 8% in 2019.

Experts say we should aim to save between 12% to 15%.

Many bosses will match contributions up to a maximum percentage – find out if your firm does and push yourself to save the most you can afford.

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