Starting a pension
Retirement may feel far off, but starting to save early brings real benefits. Get on the right track with our guides and tools for beginning your pension journey.
Starting a pension
Retirement is often described as life's longest holiday. Check out our articles, tips and guides to make sure your retirement pot lasts the distance.
Retirement may feel far off, but starting to save early brings real benefits. Get on the right track with our guides and tools for beginning your pension journey.
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A pension is a long-term savings plan designed to provide a regular income when you retire. It involves setting aside money, either through personal contributions, employer contributions, or both, which is then invested and grows over time. When you reach retirement, these savings are converted into an income, helping to support your lifestyle after you've stopped working. Pensions can be organized through employers, the government (State Pension), or personal pension plans.
Suppose you earn £30,000 a year and contribute 5% (£1,500) annually to your pension. With basic-rate tax relief at 20%, you would only need to contribute £1,200 from your net income, as the government adds an extra £300, increasing your overall savings without additional cost.
If you contribute 5% of your salary (£1,500) to your workplace pension, and your employer matches this, your total annual contribution would be £3,000. This effectively doubles your contributions and accelerates your savings.
Say you contribute £250 per month to your pension from age 30, growing at an average rate of 5% annually. By age 65, this could grow to around £250,000, providing a solid income stream in retirement.
The answer to this question really depends on your lifestyle but a good rule of thumb is you need 20 times your desired annual income for stress-free retirement. Research from the Pensions and Lifetime Savings Association (PLSA) in partnership with Loughborough University reveals that in 2022, retired couples living outside of London are spending an average of £34,000 annually (excluding housing costs). This marks a nearly 20% increase compared to the previous year.
The PLSA’s research suggests that this amount should provide what they call a ‘moderate’ lifestyle. This budget would cover everyday expenses as well as some added comforts, such as two weeks of holiday each year in the UK or Europe and a £100 monthly allowance for dining out. For a ‘comfortable’ lifestyle, however, which includes three weeks of holiday per year and maintaining two cars, a couple would require closer to £54,000 annually.
Industry research reveals that 77% of savers are uncertain about how much income they’ll truly need for retirement. Furthermore, only 20% feel confident that they’re putting enough aside for the future. To make it easier we created a free to use calculator that shows you how much you need to have the retirement income you want.
Use our free calculator to find out how much you need in your pension
Pensions & Retirement
Retirement is often described as life's longest holiday. Check out our articles, tips and guides to make sure your retirement pot lasts the distance.
Check out our articles, tips and guidesto make sure your retirement pot lasts thedistance.
Button TextThe answer to this question really depends on your lifestyle but a good rule of thumb is you need 20 times your desired annual income for stress-free retirement. Research from the Pensions and Lifetime Savings Association (PLSA) in partnership with Loughborough University reveals that in 2022, retired couples living outside of London are spending an average of £34,000 annually (excluding housing costs). This marks a nearly 20% increase compared to the previous year
The PLSA’s research suggests that this amount should provide what they call a ‘moderate’ lifestyle. This budget would cover everyday expenses as well as some added comforts, such as two weeks of holiday each year in the UK or Europe and a £100 monthly allowance for dining out. For a ‘comfortable’ lifestyle, however, which includes three weeks of holiday per year and maintaining two cars, a couple would require closer to £54,000 annually.
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