How much money do I need to retire on?

Posted on: 02 March 2015 by James Hester

How much money do you need to retire on? The answer to this question depends on your personal circumstances and the kind of lifestyle you expect.

warehouse man considers pension options

The more you save, the bigger your pension pot will be when you come to retire. And changes to the law with the introduction of what’s known as “Automatic Enrolment” also mean that you could get extra money from your employer paid into your Workplace Pension each month.

It all gives you a better chance of building up a decent pension pot so you can enjoy your retirement to the full.

Living and spending

It may depend on your choice of lifestyle, but most people tend to spend a similar amount of money in retirement as they did in their last years of working.

“Living and housing costs are relatively constant and additional expenditure on holidays or travel is often made up by saving costs associated with work, such as commuting,” says an independent financial adviser.

How long you live for will also have an impact on how much you need to have saved in your retirement pot. With people living longer and longer you could easily spend 20 years or more in retirement.

What you save

So how much do you need to be setting aside to be able to replace, or nearly replace your salary in retirement? The answer to this question will in large part depend on your final salary on retirement or what you expect it to be.

However, there are numerous online pension calculators that can help you answer the question as to how much you should be paying into your pension each month to achieve your retirement goal.

You should never think of it as being too late to join a pension scheme, especially as you could be turning down extra money from your employer as well as tax relief. And a Workplace Pension is hassle free for you as your employer does all the admin.

The more you save now, the bigger your pension pot will be when you come to retire. Paying in as much as you can afford today means you stand a better chance of enjoying the lifestyle you want in retirement.  

For more information visit DWP Workplace Pensions 

Return to 'We're All In' Workplace Pensions hub 


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