Working out how much you should be putting away for retirement is never easy, especially as it’s impossible to know exactly how long it’s going to last.


Nearly a third of UK workers say they don’t know what constitutes a good pension pot, recent research by the Institute of Actuaries found, with one in five savers anticipating that a retirement savings of less than £100,000 will be enough to last them their whole retirement. In fact, this amount would be enough to buy an annual pension of just £2,825.

A current 22-year old would actually need to save a massive £473,000 to achieve a ‘moderate’ annual retirement income of £20,200, assuming they stop work at the age of 68. A moderate lifestyle is defined as one which offers an additional degree of financial security and flexibility to adapt to changing circumstances.

How much should you be saving?

The Institute of Actuaries has calculated that you’d need to save £799 a month during your working life to achieve a moderate level of retirement. This rises to an eye-watering £1,755 a month if you want a comfortable level of retirement income, considered to be £33,000 a year.

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However, the State Pension plus current auto-enrolment contributions are likely to be enough to provide you with a retirement income of £10,200 a year. This is considered the minimum income standard in retirement, and should be enough to enable you to meet necessary outgoings, such as food and utility bills.

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It’s never too late to start

Although saving a pension pot of nearly half a million pounds to reach a moderate living standard might seem an impossible dream for most of us, even putting away small sums each month can make a big difference to your retirement income.

Based on the average UK salary of £28,000, Aviva calculates that an employee aged 45 today with no savings to date could build a pension pot of £56,100 by the time they reach the age 65, based on the current minimum employee and employer pension contributions under auto-enrolment alone.

Lindsey Rix, managing director of savings and retirement at Aviva said: Mid-life employees who are mystified by their pension savings should try to get a clear picture of what they have saved so far and how much of an income this can provide them with over the course of retirement. For some, this may be a pleasant surprise, while for others, it could be the wake-up call that’s needed to spur them to take action.

People whose pensions are in need of a boost shouldn’t be disheartened, however, as it’s never too late to save.”

To help ensure consumers are better informed about their pension savings, from November 2019, everyone who’s over-50 and has pension savings will receive a ‘Wake-Up’ pack from their pension provider, telling them how much they’ve saved, what sort of income it might generate in retirement, where their money is invested, and how much they’re paying in charges.

These packs will be sent out every five years until savers start taking money out of their pension pot.