How much to save for retirement
Here’s how to reach your retirement savings target – whatever age you start saving
The drive to encourage workplace pension saving has put many people in charge of their future retirement income.
But how much should you be saving if you want to keep up the kind of lifestyle you’re enjoying now?
While everyone’s needs are different, consumer group Which? has undertaken research that sheds some light on the issue.
A survey of more than 1,500 retired couples found, on average, retired couples said they needed £18,000 a year to cover household essentials – such as food, utilities, transport and housing costs.
But for a slightly more comfortable lifestyle, which allows for extras such as European holidays and leisure activities, they needed an annual income of £26,000.
The consumer group calculated that to generate an annual income of £26,000, a couple would need a defined contribution pot of £210,000 in today’s money – alongside their current state pension entitlement.
The calculations make certain assumptions and as such they are an indication of what people might need to save to achieve the lifestyle they expect rather than a precise prescription.
While some of the figures may look a little daunting, they do show why it’s a good idea to start the savings habit young – especially if you’re hoping to spend your retirement sipping cocktails by a pool.
Encouragingly, the figures also show that even if you’re starting to save later in life, it is still at least possible to build up a decent-sized pot.
Which? has a free online guide at which.co.uk/ saveforretirement to help people plan their retirement saving. Free guidance is also available to those nearing retirement from the government-backed Pension Wise service.
Which? research suggests how much people should save for later in life