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Planning for the future
Many people are enjoying longer retirements than they planned for, which may mean your pension needs to stretch further.

The sooner you start saving for retirement, the more time you’ll have to save, and the more comfortable you may be.

How much might you need?

Everyone’s situation is different, and there's no rule that will tell you exactly how much money you'll need for your retirement.

It'll depend on many factors, including:

  • The age you plan to retire
  • Whether you own your own home
  • The rate of inflation
  • Whether you have debts that you need to manage
  • Your family and number of dependents
  • Whether you plan to continue working, in any capacity, and semi-retire

A good starting point is to assume you will need between half and two-thirds of your salary, after tax is deducted, to maintain your current lifestyle.

Government pension

You may be entitled to a government or state pension, but this should be considered a buffer - it may not be enough to live on for a comfortable retirement.

In some countries, government or state pensions are means or asset tested and are only designed to support those most in need.

You should plan to supplement any government pension with savings and investments of your own if you can.

Remember, the terms and/or laws guiding government pensions may have changed by the time you reach retirement age.

Employer contributions

You may find your employer has an obligation to contribute towards your pension or retirement fund in proportion to your own contributions. It can help build up your retirement savings and you may also be entitled to tax relief on the combined sums saved.

Some employers might also offer ‘contribution matching’, which is when they agree to make additional contributions into your retirement savings, as long as you agree to increase your contributions as well.

When planning for your future, here are 3 key points to keep in mind:

  1. Start as soon as you can. The earlier you start saving, the longer you will have to save.
  2. Make the most of any tax-free savings and employer contributions you're entitled to.
  3. Build your knowledge. You might want to seek advice from a professional financial adviser.

Saving is important, and with a little effort it can become a healthy financial habit.

Explore: Why saving is important

Key things to remember:

  1. Before putting money into savings, it's usually sensible to pay off high interest debt first.
  2. Saving money takes effort, but setting savings goals, and reviewing them regularly, can help keep you on track.
  3. Creating a budget will help you to establish your starting point, and see how much you can potentially save.
  4. Saving any amount of money, however small, is worthwhile. It can help you get into the habit of saving.
  5. Remember the value of compound interest. The earlier you start saving, the more time you have for the interest you earn to compound.
  6. Choosing where to put your savings will depend on your goals.
  7. The sooner you start saving for your retirement, the more you'll be able to save, and the more comfortable you will be.
  8. Aim to balance savings and investments to meet your long term savings goals.
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