How much do you need in your retirement pot?

James Cridland of Coleridge Wealth Management in front of Clevedon Pier and beach

James Cridland of Coleridge Wealth Management - Credit: Coleridge Wealth Management

It’s relatively easy to work out how much you will need to live on in retirement. The tricky part is working out how you get there.

While pensions are still the dominant source of retirement income, tax-efficient investments such as Cash ISAs, Stocks & Shares ISAs and income from other sources such as property, also provide options. Meanwhile, knowing how to use your Defined Contribution (DC) pension pot – and Defined Benefit (DB) scheme if you have one – to maximise income is important in ensuring you can live the life you want during your later years.

What do I need at what age?

With the caveat that there is no golden rule, and it’s never too late, or too early, to start saving for the retirement you want, it’s often helpful to think in terms of saving a percentage of your earnings at certain ages. A good starting point is to halve your age and try to save that percentage of your salary each year. 

  • 20s → 10 per cent 

  • 30s → 15 per cent 

  • 40s → 20 per cent 

  • 50s → 25 per cent

Another way to look at it is to aim to have saved multiples of your earnings by a certain age. For example: 

  • Three times your earnings by the time you are in your 30s 

  • Six times your earnings by your 50s 

  • Eight times your earnings by your 60s

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While the above can sound intimidating, it’s always worth remembering that it doesn’t all have to come from you. There is tax relief on pension contributions, your employer will likely contribute if you work for a company, hopefully growth in the investments you make, and the snowball effect of compounding. 

It’s never too late

Even though it’s better to start saving earlier, it’s never too late to begin, even if you’re in your 40s or 50s. Of course, the more you save, the greater flexibility and choice you have over how long you might want to work for. 

Beyond your pension

Retirement used to be all about the pension. That’s still a large part of it for most people and the most obvious tax-efficient choice, but now people have more flexibility. One tip is to make full use of your ISA allowances to ensure a broad portfolio of tax-efficient savings that can be used in retirement. Other potential sources of income include tapping into the value of your property, other investments or even other earnings. Plus, don’t forget your state pension.

Depending on your age, it’s possible to move different pension pots around to maximise income in retirement:

Those in their 30s and 40s will often end up with multiple DC pension pots from moving jobs throughout their career. Consolidation is possible, but always talk to your financial adviser before making this decision as it depends on what’s right for you. The advantage of DC pots is they are more portable than DB schemes, meaning funds can be accessed at a time of your choosing after age 55 (57 from 2028).

For those people currently in their 50s and 60s, you’re more likely to have a mix of DB and DC pensions. This can be more complex and requires a slightly different approach and calculation because moving a DB pot is a complicated decision. 

The next steps

Planning for your retirement can be overwhelming, but we can help you begin the journey of budgeting for your later years. If you’re thinking of starting a pension or would like to review your existing pension plans, it’s a good idea to get advice.

To receive a complimentary guide covering retirement planning contact Coleridge Wealth Management on 01275 430024 or email

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is generally dependent on individual circumstances.