While you don’t need to squirrel away thousands of pounds a month to banish retirement worries, the older you are when you start paying into your pension, the more you’ll need to save each month.

Wealth manager Interactive Investor has analysed how much you’d need to save from your salary each month to have a moderate retirement.

To achieve a moderate retirement you need to have a pension pot of close to a quarter of a million pounds.

To achieve this goal, a new pension saver aged 25 years old needs to save around £155 each month. If you are aged 40, you would need to save around £314 a month, while 50-year olds must save £625 each month, more than four times as much as a 25-year-old.

Self-employed workers need to save more because they do not have employer contributions to help boost the value of their pot. Although they do still receive tax relief.

A new pension saver who is 25 and self-employed would need to save £248 into their pension each month before tax to achieve a moderate retirement, £503 if they are aged 40 years old or £1,000 each month if they don’t start a pension until they reach 50-years old.

If you are self-employed, you need to save around 60% more than someone who is employed to achieve the same level of retirement.

Alice Guy, head of pensions and savings, said: “It’s encouraging that, if you start young, you don’t need to save thousands each month to achieve a moderate retirement. In fact, someone who starts saving in their twenties can potentially save enough for a moderate retirement with £155 pension contributions each month, which would only cost £124 after tax, assuming they increase their contributions by 2% each year and enjoy 5% annual investment return. Their contributions will be boosted to £248 each month after employer contributions. The younger you are, the longer you have to save and the longer you have for investment compounding to work its magic.”

Guy says those who didn’t start saving for their retirement at a young age should not be put off from starting later in life.

She added: “The biggest thing you can do to make a difference to your retirement is to get started with pension saving, whatever your age. Small, regular contributions really mount up and just £50 each month could add up to £76,000 over 40 years and will only cost £40 after tax, assuming 5% investment growth.”

Top tips if you need to fill your pension pot

Interactive Investor’s tips if your pension pot is lagging:

• If you can afford it, consider boosting your pension contributions by paying in more than the minimum amount.
• If you’re thinking of moving jobs, take a look at your prospective employer’s pension contributions as well as the salary. Some employers pay in more than the minimum 3% required and a small percentage boost could make a big difference in retirement.
• Check your pension and any ISAs at least annually and discuss your plans for retirement with your partner. Your partner’s pension could have an indirect impact on your plans as couples need slightly less in retirement than single people.
• If you’re a homeowner, then consider boosting your pension payments once you’ve cleared your mortgage.
• If you can’t afford your current pension contributions, then consider reducing the percentage instead of stopping them all together and be careful not to lose valuable employer contributions as some employers will stop their contributions if you stop yours.
• Don’t forget tax relief. The tax rules mean it only costs £80 to contribute £100 to your pension and £60 to contribute £100 if you’re a higher rate taxpayer. You’ll also get 25% tax free when you come to draw your pension.
• Check your old pension pots and consider if you could save money and hassle by consolidating old pensions. You need to check first in case you lose any valuable benefits by transferring your pension.