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How much do I need to retire?

How much pension do I need to retire?

Tim Heming
Written by  Tim Heming
Ella Jukwey
Reviewed by  Ella Jukwey
5 min read
Updated: 06 Nov 2023

If you're planning for the future, you're probably wondering how much you should be saving for your retirement. Our guide can help you work this out

We've teamed up with Profile Pensions to help you choose the right private pension plan. They can help you combine your old pensions for free and they'll choose the best investment plan for you, using funds from the whole of the market. You'll also get your own dedicated Pension Adviser to answer any questions you may have. If you need help tracing a lost pension or want them to check for any penalties or benefits, they can also do that for a one-off fee of 1% of your pension value (taken at transfer from your pension pot).

When should you start saving for a pension?

It's never too early – or too late – to start saving for a pension. You may be worried you've put it off for too long and now a pension will either cost too much per month or give you too little in retirement. But you might be surprised at what you could achieve, even with small monthly savings over a few years.   

Clearly, the earlier you start saving the more you could build up in your pension pot for old age and the longer it’s invested. But even if you’ve not got around to it yet there could still be plenty of benefit in starting a pension, including tax relief from the government on your payments into your pension.

couple with umbrella

Does saving or investing make the most sense?

Whether saving into a cash savings account or investing in equity-linked products, the best option for you will depend on your financial circumstances, age, how long you have until retirement, and your attitude to risk and capacity for loss.  

If you were to save in a cash ISA, for example, then you'd be able to access your money when you need it and would be fully in control, but with a lower potential for growth. With a stocks and shares or equity ISA you’ll usually want to invest your money for as long as possible to see the best returns and ride out the peaks and troughs of the stock market.  

If you invest in a pension, you're committed to not touching the money until you're 55 (expected to rise to 57 in 2028). You could also benefit from contributions from your employer or government tax relief.  

Our guide on whether you should build up a savings account or have a pension can help further.

How much should I save into my pension?

This will depend on when you start saving into a pension, the age you plan to retire and how much income you’ll need to live when you stop working. 

A rule of thumb is to divide the age you start paying into a pension in half and then put that percentage into your pension each year. 

For example, if you start paying into a pension aged 25, you would look to save 12.5% of your salary in a pension. If you don’t start a pension until you’re 40 years old, then it would be 20%.  

For a 25-year-old earning £30,000, this would equate to £3,750 a year or £312.50 a month into your pension. 

While this might seem a lot, if you can include employer contributions and government tax relief, it starts to feel more achievable. Starting earlier allows you more time to make contributions and more time for your investments to potentially grow.

How much should I have in my pension pot at my age?

Because everybody is different and there is no definite figure to aim at for retirement, it’s not possible to give precise amounts for how much you should have in your pension pot at a given age.  

How much you should have saved by your retirement will often depend on the disposable income you’re used to having, so you can continue to live a similar lifestyle.  

The table below gives a ballpark guide for savings by age, but everyone's situation and circumstances will be different so this can only act as a broad guide.


Target pension saved


One year's salary


2 x salary


3-4 x salary


5-6 x salary


5-6 x salary


7-8 x salary


8-9 x salary


9-10 x salary

67 (or State Pension age)

10 x salary

How much do I need to retire?

The best place to start planning for your retirement is to decide on the income you’ll need each year when you stop work and start drawdown from your pension. From there you can work out how much you need to have saved – and at what age you can afford to retire.   

For example, if you were earning £35,000 per year and can expect to do so until retirement, you may be aiming to retire at age 65. You might be able to set aside £300,000 throughout your career to put towards your retirement but would struggle to save any more than that.  

This would mean you would be below the 10-times final salary rule of thumb. By working two more years until the age of 67 you can look forward to a higher income as your pension pot will be covering fewer years and you may also be eligible for the state pension too. This also gives you a few extra years of contributions and potential growth, as your pension would be invested for longer. 

Our pensions calculator, which takes into account your age, current pension pot value, monthly contributions and whether you will get the full state pension, can help you determine how much you might receive each year.

How do I start a private pension?

Setting up a personal pension can be quick and simple online with a private pension provider. You can then set up contributions to transfer in old pensions. 

You don’t need a financial adviser or broker, but getting expert and impartial advice is a good idea if you're not a confident or experienced investor. People who take financial advice tend to increase their pension wealth. 

Private pensions are called ‘defined contribution’ or ‘money purchase’ schemes, which means what you get out will be a function of what you pay in. Our guide explaining private pensions gives you more information.

Other useful guides

Pension types available to UK savers 

How much should I be paying into my pension? 

Our guide to workplace pensions

How to find a lost pension

Compare private pensions with MoneySuperMarket

We have teamed up with our chosen partner Profile Pensions to help you choose the right private pension plan.  

They can help you combine your old pensions into one, easy-to-manage plan, if you decide it's in your best interests, and they will choose the best investment plan for you, using funds from the whole of the market.  

You will also get your own dedicated Pension Adviser to answer any questions you have. If you need help tracing a lost pension or want them to check for any penalties or benefits, they can also do that for you, for a one-off fee of 1% of your pension value (taken at transfer from your pension pot). 

Capital at risk. Past performance is not a guide to future performance. This website does not constitute personal advice. If you are in doubt as to the suitability of an investment please speak to a financial adviser. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. Ltd is an Introducer Appointed Representative of Profile Pensions, a trading name of Profile Financial Solutions Limited which is authorised and regulated by the Financial Conduct Authority. FCA number 596398. Registered in England & Wales, Company Number 07731925. Registered office address: Norwest Court, Guildhall Street, Preston, PR1 3NU.

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