The amount you need to save a month for a comfortable retirement
Savers starting from scratch later in life, at the age of 30, need to squirrel away £198 a month, and for those saving from 40, the figure jumps to £338 a month.
The research, published by campaign group Which?, said those starting their pension pot at 50 need to save £633 a month to achieve an annual income of £26,000 for couples.
The average retired couple needs £18,000 a year to cover household essentials such as food, utilities, transport and housing costs, according to Which? But an annual income of £26,000 would allow couples extras such as a European holiday and leisure activities.
To achieve a £26,000 annual household income – and factoring in basic 20% tax – they would actually need £26,750 gross.
A £26,000 annual income requires a £210,000 defined contribution (DC) pot in today’s money, alongside the state pension.
Which? surveyed 2,700 retired and semi-retired couples and more than half said they could afford most extras they wanted. One in five households were semi-retired, topping up their pension with income from part-time work, which produced an average £8,490 a year for a couple and £6,412 for individuals.
It also found those who didn’t have enough money tended to downsize to unlock cash from their home, while others used equity release which allows them to stay put and borrow money against the value of their property.
Which? said that as a general rule, savers need to aim for a retirement income that’s two thirds of their salary.
Gareth Shaw, money expert, 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.”