Retirement – How Much Should You Have Saved?

If you’re in the early stages of your career, the thought of growing old and retiring probably hasn’t crossed your mind too often – after all, it’s probably not too healthy to be pondering that far into the future regularly. That said, with the economic situation the way it is and many young adults literally living pay cheque to pay cheque, it’s definitely worth considering what life down the line may hold.

Despite the introduction of higher contributions as part of auto-enrolment in April 2019, many young adults’ pension pots are looking decidedly smaller than they should – a problem that can remain out of sight, out of mind for now, but could pose significant issues in the future.

The question is, how much should you have saved in your pension, if there is a set amount at all?

What’s your standard?


The answer to how much you should have is, by and large, subjective and based on a number of factors. For one, it depends on how old you are, how much you’re earning and how much you’ve planned to save in the future. Secondly, it depends on your standard of life, and what represents a “respectable” standard of post-work living to you.

Those earning well and living a somewhat luxurious life will no doubt expect that to continue once retired, while those at a lower income will perhaps be looking for a simpler life with minimal expenditure once work has finished. Getting to grips with your expectations for retirement, coupled with how much you’re earning right now and intend to in the future, should help shape your level of desire to inject further funds into your pension pot.

Understand there will be a change in your budget and spending

The further away from retirement you are, the harder it is to truly understand what your budgetary requirements will be in the future. If you’re currently in your twenties or thirties, it’s almost impossible to say what your needs will be in 40 to 50 years’ time, how much things will cost and how far you’ll have gone in your career.

What’s worth remembering is that your budget and spending requirements as a retired person are likely to be significantly different than those when still in work. This is something you can calculate more accurately as you close in on retirement age and make appropriate preparations for.
In the meantime, it’s up to you to create a savings pot with an amount you see as feasible to live on in the future.

What are you bringing with you?


Many of us today are straddled with some form of debt, be it student loans from our university days or credit card debts that accumulate interest. Unfortunately, these debts don’t disappear when retirement comes, so it’s important you have them cleared before you get there so you can live off your full pension income.

If you’re getting closer to retirement and still have debts in your name, do your utmost to get rid of them as soon as possible, then you can focus your savings on your future pension rather than current IOUs. How you do that is up to you, whether you want to consolidate the debt through further funding or try and meet the problem head on with what money you have. Either way, attacking your debts will pay dividends for your retirement.

There is no absolute answer to how much you should have saved for your pension because there are so many factors at play. What is clear, however, is that you should probably be paying some thought to where your pension pot currently stands and what you can be doing to grow it over the next few years, based on how you expect to live in the future. If you haven’t looked into this before, the sooner you can address it, the better.