It’s hard to work out how much pension savings you’ll need to stop work. That’s mainly because it might be a long way into the future. It can also be hard to imagine your life in retirement and how much money you’ll need.
However, it’s a good idea to think about this now. Having a target for your pension saving can help you feel more in control of your future, even if stopping work is a long way off for you.
There are different ways to approach this:
Plan for the necessities
Start by noting down everything you might need to spend your money on once you’ve retired. You can find a useful tool to help with this on the Money Helper website . This tool will remind you to include everything from TV licence fees and insurance to Christmas presents.
Decide on the retirement lifestyle you want
There’s more to life than necessities. Think about how much extra money you’ll need for the retirement lifestyle you’d really like. The Pension and Lifetime Savings Association (PLSA) has defined three levels of retirement lifestyle. Take a look at PLSA’s Retirement living standards.
Work out what proportion of your salary you’ll need
A useful approach is to work out the percentage of your current salary that you’ll need in retirement. MoneyHelper suggests these salary percentages as retirement income:
Salary range (per year) |
Percentage of salary needed in retirement |
Up to £12,199 |
80% |
£12,200 to £22,399 |
70% |
£22,400 to £31,999 |
67% |
£32,000 to £51,299 |
60% |
£51,300 and above |
50% |
Based on research by the Department for Work and Pensions (DWP), 2024