It's the million-pound question: how much is enough when it comes to saving for retirement?According to official figures, four in ten of us are underestimating what we need to set aside
Half of the 12 million workers 'under-saving' earn at least £34,500 a year, according to a Government study of its flagship workplace pension scheme
That means 6 million middle-class workers face a drop in their standard of living when they retire, unless they act now
Look ahead: Half of the 12 million workers 'under-saving' earn at least £34,500 a year, according to a Government study of its flagship workplace pension schemeMost people save into 'defined contribution' plans that are linked to the stock market
With these deals, working out just how much you need to set aside to ensure a comfortable retirement is tricky
So how much do you need in old age? And how can you make sure you're saving enough? Money Mail has the answers
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Give children the gift of a savings habit this Christmas -. Share this article Share 96 shares HOW THIS IS MONEY CAN HELP Are you saving enough for retirement? Check with our pension calculator Calculators at the readyYour first task is to work out what income you'll need when you stop work
Experts disagree on what this target should be. Some say you should aim for two-thirds of your final salary
For someone on the average UK wage of £27,000, that would mean an annual income of £18,000 in retirement
The Department for Work and Pensions analysis, published this week, says someone on £13,000 or less should aim to have 80 per cent of their salary in old age, or £10,400 a year
For someone on more than £55,000 it recommends 50 per cent, or £27,500 a year.Other experts suggest setting aside a lump sum worth ten times your final salary
So someone earning £27,000 would need £270,000 to see them through old age.In truth, everyone is different
To work out the right number for you, sit down with a pen and paper and roughly calculate your likely retirement outgoings
Start with essential spending such as utility bills, running the car, the food shop and repairs
The Office for National Statistics says the average annual food spend is £2,808 while gas and power bills cost £1,253
Remember, these numbers will rise every year with inflation.Next, consider the costs of the lifestyle you want
Include holidays, meals out and hobbies such as golf or dancing classes.Take into account practical considerations such as whether your spouse will be relying on your pension, and whether you might downsize your property or move into retirement accommodation which charges fees
How much do you need to save for retirement? The amount that you need to invest each month for retirement depends on how big a pension you want, but it also depends on your age
Our pension calculator can help you understand how much you may need to save.Put in your income, when you expect to retire, how much you are setting aside, your pension pot now, any other funds you have and the percentage of your current salary that you hope for in retirement
The calculator will tell you how much income you could get in retirement, adjusted for inflation, and also your projected total retirement pot
The figures are based on prospective returns from numbers crunched by Fidelity's investment experts, which err on the side of caution
With luck, investment returns will be better and you will end up with an even bigger retirement pot
Click the button above or the pension calculator link here to try it out. Don't underestimate how long you will live, or forget the state pensionDon't underestimate your life expectancy
Many savers only expect their pension pot to need to last them a few years but a 65-year-old can typically expect to live two more decades
Peter Chadborn, director at advice firm Plan Money, says: 'We are living longer in retirement and each generation seems to want a better retirement lifestyle than the one before
You may have 40 years of earning to save enough for 25 years of not earning.'Remember the state pension will lighten your load (get a forecast at gov
uk/check-state-pension or call the Future Pension Centre on 0800 731 7898.The full £159
55 a week flat-rate payout works out at £8,296 a year. So if you're aiming to have a retirement income of £18,000 a year, you'll need to fund about £10,000 yourself
You should multiply this amount by 25 years to work out the absolute minimum you'll need — £250,000 in this case
This figure presumes you'll run down the pot gradually so nothing is left. In reality, you're likely to continue to get a return on your savings during retirement if you've invested them wisely
You won't want the pot to run dry in case you live beyond 25 years, or so you can leave something for a spouse
So think of these figures as a starting point. The Department for Work and Pensions analysis, published this week, says someone on £13,000 or less should aim to have 80 per cent of their salary in old age, or £10,400 a yearHow to cover the basicsThe International Longevity Centre think-tank estimates that workers typically need to save 18 per cent of their salary to obtain these target retirement incomes
With bills, mortgages and supporting children through university, that's far too much for most people to give up
One solution is to start saving as early as possible. This gives your money longer to grow — and means it gets an extra boost from compound interest
Experts say it's a mistake to wait until you don't have a mortgage and the children have flown the nest
Peter Chadborn says: 'A little from a young age is a good discipline — waiting until you're mortgage-free might mean you can save more but you won't have as long to do it
'Jamie Clark, business development manager at Royal London, adds: 'Start small and increase your savings every time your salary rises
This way your pension should track in line with your lifestyle.' The International Longevity Centre think-tank estimates that workers typically needs to save 18 per cent of their salary to obtain these target retirement incomesSay you decide £15,000 a year will see you through in old age
After taking into account the £8,296 state pension, you need to fund £6,700 a year yourself
Multiply that by 25 years and you will need £167,500.If you start saving at age 20 and the funds in your pension pot grow at 5 per cent a year, you'd need to put £82
50 a month into your pension to build up £167,000 by age 65. If you waited until age 40, you'd have to save a much bigger £280 a month to amass the same amount
Under the Government's flagship retirement scheme introduced in 2012, the vast majority of company staff are now automatically enrolled into pensions by default
But not enough is going into their pots. The finding that 12 million people are under-saving comes from the DWP's analysis of its 'auto-enrolment' programme
Currently, only a minimum of 2 per cent of your annual salary must go into your pension pot under the DWP's rules
Half of this must come from your employer (they pay this on top of your normal salary)
Basic-rate taxpayers then have a minimum of 0.8 percentage points and higher-rate payers 0
6 percentage points deducted from their salary and put into the pension. The remaining 0
2 or 0.4 percentage points comes from the Government in the form of tax relief.These numbers will be slightly different in Scotland after the SNP hiked its income tax rates last week
Firms are only obliged to ensure 2 per cent of earnings between £5,876 and £45,000 go into your pension
If you saved 2 per cent of the full average £27,000 salary, a total of £45 (including tax relief and your employer's contribution) goes into the pot each month
At that rate, if you started saving at age 20 you would have just £24,300 by age 65
But the benefits of a workplace pension mean it wouldn't cost the earth to increase your savings to the magic £82
50-a-month mark.At least £22.50 of this would come from your employer (the 1 per cent payment your boss must make), with the Government providing £12 in tax relief
That leaves you sacrificing £48 a month from your salary.Again, these figures will be a few pounds different in Scotland under its tax changes
If you're starting at age 40 and need to put aside £280 a month, tax relief would provide £51
50 and your employer would pay £22.50. That leaves you needing to contribute £206 from your salary
The minimum percentage for auto-enrolment savings will rise to a total of 5 per cent in April 2018 and again a year later to 8 per cent
Saving that percentage from the full £27,000 average income would increase your contribution to £180 a month, or £2,160 a year, meaning you'd comfortably meet your target for a £15,000 annual income
To get the £6,700 not covered by the state pension from an annuity — your main alternative option, which provides a guaranteed income for as long as you live — you'd need to set aside £207,000, according to figures from investment company Fidelity
This is based on a policy for a single pensioner with payouts rising by RPI inflation each year
Contact the pensions department or whoever deals with HR at your employer to find out how much is going into your plan
Good employers often pay in more than the minimum — for example, matching your contribution so if you pay in 5 per cent the company adds another 5 per cent
Under the Government's flagship retirement scheme introduced in 2012, the vast majority of company staff are now automatically enrolled into pensions by defaultSave extra for special treatsMany savers will want more than £15,000 a year in retirement
To get to £25,000, your savings will need to generate £16,700 in income, after the state pension is taken into account
That means building up £417,500 if you want your pot to last 25 years.If you save from age 20 to 65 and your investments grow at 5 per cent a year, you will need to set aside £205 a month
STEEL PENSIONS PROBED Seventeen financial advice firms are being investigated over the Port Talbot steelworker pension scandal
More than 2,000 people have transferred out of the troubled British Steel final salary pension scheme
Experts say workers are giving up a lifetime income for risky funds that charge fees of up to 7
5 per cent. The City watchdog is investigating claims that that they have been given poor advice
Six companies have stopped giving advice: Mansion Park Limited, Active Wealth UK, Pembrokeshire Mortgage Centre, Vintage Investment Services, Retirement & Pension Planning Services and West Wales Financial Services
A further 11 are under investigation.p.thomas@dailymail.co.uk By April 2019 your employer will have to contribute a minimum of 3 per cent of your salary to your pension pot if you join your workplace scheme
So your company would pay in £67.50 a month on the full £27,000 average salary.That leaves you putting aside £137
50 a month. Of this, £27.50 will come through tax relief so just £110 a month would need to come from your pay packet
Someone aged 40 would need to set aside £698 a month, or £504 when tax relief and employer contributions are factored in
Alternatively, to get the £16,700 you want from an annuity you'd need to set aside £545,000, according to Fidelity
If you want the best of the bestIt's beyond most people's needs, but what would you need for a £40,000 income? The answer is £1 million — the maximum allowed — if you're splitting it evenly over a 25-year retirement
Remember, your pension isn't the only asset you'll have available for retirement. Property, Isas and other investments can be useful
Downsizing to a smaller house that's less costly to run will free up cash. According to property website Zoopla, the average asking price of a four-bed house is £486,494, while the typical two-bed costs £295,314
Downsizing would free up £186,414 (after you'd paid stamp duty of £4,766).Say you have built up £200,000 in Isas and other investments
That leaves you a £600,000 shortfall after downsizing your house.To get your pension to £40,000, you'd need to set aside £295 a month from age 20 until age 65
Assuming your employer contributed 3 per cent of your salary, as it will have to from April 2019, you would need to save £182 a month
If you started at age 40, you'd need to set aside £1,005 a month, or £750 when tax relief and employer contributions are factored in
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