If you don’t want to spend your retirement checking out groceries or stacking shelves in a supermarket because you don’t have enough cash, you need to set a savings target.
That applies if you are as young as 20 and have just started work as much to someone in their 50s.
The difference is the amount of money each retirement saver must squirrel away each month.
Research by Which? magazine reveals the average couple needs an income of £18,000 a year to cover essentials and live comfortably in retirement, while an income of £26,000 provides some extra cash for decent holidays and treats.
Anyone wanting a luxurious retirement should aim to generate a £39,000 a year income.
But how much do you need to save to hit those retirement cash targets?
Never too late to save
Even if you are only 20, you need to set aside £131 a month in a pension, while someone starting to save at 50 should earmark £633 a month for their retirement.
At 30, anyone putting less than £338 a month into a pension is already underperforming, while at 40, the contribution should be around £198 a month.
The clear message is the earlier someone starts saving, the easier building an adequate retirement fund becomes – but it is never too late to save something.
The question is then how big should your pension pot be to generate the cash you need to retire in the style you dream of?
£1 million pension pot
To guarantee an income of £26,000 a year after tax, the retirement pot would have to be £370,000, to buy an annuity or £210,000 for income drawdown, says Which?
For a luxurious retirement, the pot should be around £1 million to buy an annuity or £550,000 for income drawdown.
Gareth Shaw, money expert at Which? said: “When it comes to saving for your retirement, start early and save often.”
“Being a part of your company pension scheme is a good start, but, depending on how much you contribute, you could well need to save a little more to have the lifestyle you want in retirement.”
The survey did not include the state pension of just shy of £8,300 a year, which doubles for a couple.
