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.