How to save for retirement
Take control of your financial future with practical tips to save for retirement and grow your pension.
How much money do you need to retire?
Retirement looks different for everyone. Some people prefer a simple, low-cost lifestyle, while others dream of travelling the world and enjoying indulgent hobbies.
According to Pensions UK, there are 3 to consider:
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Minimum lifestyle
Costs: around £13,400 per year for a single person and £21,600 for a couple (after tax).
What it covers: all essential needs, with a little extra for leisure, like a week-long UK holiday.
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Moderate lifestyle
Costs: around £31,700 per year for a single person and £43,900 for a couple (after tax).
What it covers: greater financial security and flexibility, including a small car and a 3-star holiday abroad.
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Comfortable lifestyle
Costs: around £43,900 a year for a single person and £60,600 for a couple (after tax).
What it covers: more financial freedom and luxuries, such as 4-star holidays abroad and weekend breaks in the UK.
How to calculate how much you’ll need
Begin by reviewing your current monthly expenses and consider which costs might change in retirement. For example:
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Mortgage payments and commuting costs may decrease
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Heating bills, healthcare, and hobbies like travel may increase
Take the guesswork out of planning. Use our retirement calculator to estimate how much income you’ll need to achieve your goals.
How much should you be saving into a pension?
When it comes to pension contributions, here’s a simple rule of thumb:
Halve your age when you start saving, and that’s the percentage of your salary to save each year.
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If you start at 20, aim to save 10% of your income each year
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If you start at 30, aim to save 15% of your income each year
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If you start at 40, aim to save 20% of your income each year
Your retirement income will likely come from a mix of sources, including:
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Your workplace pension
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A private pension
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The state pension
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Any savings or investments you’ve built up
Explore: A guide to understanding pensions
What to do if you’re behind on retirement savings
Falling behind on retirement savings can be stressful, but don’t worry. There are steps you can take to catch up and help secure your future.
Steps to grow your pension pot
1. Increase your pension contributions
If you can free up extra cash, now is the time to boost your pension contributions. Not only could this grow your retirement savings, but you’ll also benefit from government tax relief. The earlier you start, the more time your money has to potentially grow.
To increase your pension contributions, you could:
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Take advantage of workplace pensionsCheck if your employer offers to match additional contributions. If they do, take full advantage of this valuable benefit.
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Ask about a salary sacrifice pensionWith a workplace pension, salary sacrifice lets you reduce your salary. The difference is paid into your pension. This can grow your pension pot while reducing your National Insurance contributions. However, keep in mind that salary sacrifice may impact benefits like life cover. Speak to your employer to understand the details of their scheme.
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Consider a private pension
Consider moving savings or investments into your private pension. You can contribute up to 100% of your earnings each year (capped at £60,000) and carry forward unused allowances from the past 3 tax years. For example, moving £20,000 into your private pension could result in a £5,000 government top-up, bringing your total to £25,000. Higher-rate taxpayers may also reclaim additional tax relief.
Tip: before making large contributions, consider seeking financial advice to make sure you’re making the best decisions for your circumstances.
2. Review your existing pension investments
Take stock of your workplace or private pensions:
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Check your fundsReview what funds you’re invested in, their performance, and associated charges.
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Switch if neededConsider switching funds if the default option doesn’t meet your objectives.
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Compare providersLook for lower fees or better performance records.
Remember: if consolidating pensions, check for exit fees or potential loss of benefits. Also, be wary of scams when transferring pensions.
3. Trace old pensions
If you’ve had multiple jobs, you may have lost track of some pensions. Use the to locate them. It’s estimated that pensions worth over £31 billion are currently unclaimed or lost in the UK.
4. Check your state pension
The state pension can be a vital part of your retirement income. To qualify, you need at least 10 years of National Insurance contributions.
Through GOV.UK, you can:
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Get a state pension forecastYou can find out how much state pension you’re entitled to and whether you can increase it.
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Fill gaps in your National Insurance (NI) recordIf you have gaps in your contributions – from career breaks or low earnings for example – you may be able to boost your state pension by making voluntary contributions. .
5. Boost your savings
The more you save now, the more you’ll have in retirement. Here are some ideas to grow your savings:
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Review your budgetLook for ways to cut unnecessary expenses and redirect that money into your pension.
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Generate extra incomeConsider a side hustle or turning a hobby into a source of income.
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Consider a stocks & shares ISAA stocks & shares ISA is a tax-efficient investment account, which can complement your pension and offer more flexibility.
Explore: Should you invest in a pension or an ISA?
Tip: use our to visualise your retirement goals and see how much you need to save.
If you receive a windfall, such as an inheritance, consider investing it for retirement. Investing can offer higher growth potential than savings accounts. Remember, investing has its downs as well as ups – and you could get back less than you invest.
Explore: Saving vs investing
6. Make the most of joint allowances
Women often face unique challenges in retirement, such as smaller pensions and longer life expectancy. If you’re a woman facing retirement alone, it’s even more important to look at ways to increase your retirement income.
If you’re married or in a civil partnership, look at your pensions and savings together. A financial adviser can help you:
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Optimise your allowances to reduce tax
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Help make sure both partners have funds in pensions and investments
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Consider options like the marriage allowance, which can reduce your tax bill
7. Adjust your retirement plans
If you’re nearing retirement and worried about your savings, consider these options:
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Delay retirementWorking longer can give you more time to save and reduce the number of years you’ll rely on your pension. Let your provider know if you plan to defer your pension, as it may make sense to adjust your investments.
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Consider semi-retirementMany people are choosing to work reduced hours in semi-retirement. This can provide financial security while allowing you to enjoy a better work-life balance. It’s also a good way to stay active and socially connected.
Key takeaway
No matter how far you are from retirement, there are always steps you can take to improve your financial future. Assess your current situation and make small, positive changes today.
This article was last updated: 31/03/2026, 11:03
