Perhaps you’ve wondered how much money you need to save to enjoy a comfortable retirement?
The issue is that retirement would vary depending on the person, so what you should pay into your pension pot will depend on how you want to retire.

1: How much money do you need to retire?

People are often under the impression that you’ll need less money in retirement because expenses decrease. But this may not be the case depending on your circumstances. Higher costs of living and costly housing can increase your daily expenses, which might mean you’ll need a higher income to maintain a certain lifestyle.
Comments on house prices and transport costs are common when thinking about retirement, but if you rent then owning may not benefit your retirement. If you plan to pay off your mortgage before you retire, that could give you more money each month.

2: What happens when you retire, determined by your lifestyle

77% of people are worried about their retirement without a properly calculated budget. The Retirement Living Standards have created three levels of expenditure to give you a better idea of what retirement income you might need based on the cost of your life today.

Minimum – all your basic needs with some left over for fun
Single: £13,000
Couple: £21,000

Moderate – more financial security and flexibility
Single: £20,800
Couple: £30,600

Comfortable – more financial freedom with some extravagances
Single: £33,600
Couple: £49,700

It will help you figure out how much money you need to live comfortably in retirement, but it won’t tell you how much you should invest, so there may be a more precise amount of money that is good for you.
source: https://www.retirementlivingstandards.org.uk/details

3: Is a workplace pension enough to retire on?

Employers need to pay 3% of your salary into your pension, and you have to contribute 5%- making your total contribution 8% if you don’t make any changes.

Is it enough to just do auto-enrolment for a company pension? The answer is no. It all depends on what you want from retirement. If you were on a UK income of £31,400 and contributed 8% of your annual salary to your workplace pension, then the total contribution would be £2, 512.
To build a successful retirement fund, you might need to look for more ways than just pensions. For example, you can invest your savings in other places or even consider a side hustle business, read about all the different side hustle ideas in our side hustle section here.

4: What should you think about when deciding how much to pay into your pension?

When thinking about how much to pay into your pension, there are so many individual variables that need to be considered. Many of these variables will determine the amount.

⦁ What age you are
⦁ How to retire and support yourself
⦁ How much you’re paying for
⦁ How much your employer should pay you
⦁ How to save for retirement
⦁ Find out your National Insurance contributions
⦁ How to invest wisely
⦁ The best time to withdraw your tax-free lump sum

To understand your retirement, a calculator that takes into account all relevant information that uniquely corresponds to your situation is the way to go. These calculators provide forecasted numbers based on data you input about timeframes chosen by the individual, so you have an idea of what this amount could be worth at a certain point in time.

How much your pension will be worth and how much it will pay can easily be determined by performing a quick calculation- although it’s important to remember that these figures are based on forecasts, they should at least give you an idea of whether you’re on track for the retirement of your dreams.

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