How much should you actually be saving for retirement?

Retirement should be the time in your life where you’re able to enjoy the fruits of your labour. However, simply paying into a pension for when you retire might not allow you to do this if you’re not putting enough away. But how much is “enough”? Well, here at Charters Private Wealth, we spend a huge amount of our time helping clients understand just that. Below are a few questions to think through to help you get started.

How old are you?

Obviously, the sooner you start saving for your retirement, the more time you have to put money away. Equally, the longer you leave it to start paying into your pension or savings, the more time—and money—you’ll need to make up. As a result we’d always encourage you to start saving as soon as possible.

A great way to ensure your contributions are adequate for your needs later in life is to take the age you start paying into your pension, then divide it by two. This is the percentage of your pre-tax salary you need to put away every year until you retire. The earlier you start paying in, the lower the percentage; procrastinating will just mean you need to contribute more later on!

How much is matched by your employer?

Contribution matching by employers can really help boost your nest egg, so it’s worth keeping up to date not only with how much your employer is presently matching but also how this amount will increase if you enhance your contributions. That said, it’s a good idea not to rely too much on contribution matching, concentrating instead on reaching your savings goals on your own.

What are my saving habits like?

Being truthful about how good you are at saving will help you make the most of your positive habits and reduce those which might hinder your endeavours to build up your pension. Make sure saving is the first thing you do: rather than putting away whatever you have left at the end of the month, make sure your savings leave your bank account as soon as you get paid. Why not pay yourself first?

If you receive a pay rise, make sure you take the opportunity to increase your savings so that the extra money doesn’t all go towards the here and now. Most importantly, don’t give up! Even if you start saving below the rate you should be putting money away, this is better than not saving at all, and helps to make saving a habit for when you’re in a position to bump up your contributions later.

If you have any questions around this topic, please feel free to get in touch with us directly on 01789 263888 or email