How much do you need for a comfortable retirement?

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A survey by Which? found that on average retired couples need £18,000 a year to cover their household essentials such as housing, food and bills. But the figure rose to £26,000 a year when extras such as leisure activities and the annual holiday to Europe are included — the kind of comfortable retirement that most people aspire to.  

The research is based on 1,590 retired couples from a survey of 2,752 Which? members in February 2017.

However, to generate an annual income of £26,000, a retired couple would need a defined contribution pot of £210,000… on top of their state pension entitlement.  If your pot is likely to fall short, here’s what you need to put by each month to achieve it:

  • £131 a month from the age of 20
  • £198 a month from 30
  • £338 a month from 40
  • £633 a month from 50

These figures may look big, but don’t forget that you get tax relief on your contributions. If you’re a basic-rate tax-payer and contribute £80 a month to your pension, the government tops it up with a further £20 taking the total amount to £100. And if you’re a higher-rate tax-payer, your tax relief is even higher.  It’s never too early or too late to start saving for your retirement, and it’s best to save a small but regular amount than nothing at all.

Comparetheplatform’s guide to pensions can be found here and the guide to pension freedom options here.