Your money: Make pension saving a habit, not a chore

THE drive to encourage workplace pension saving has put many people in charge of their future retirement income.

But how much should you be saving if you want to keep up the kind of lifestyle you’re enjoying now?

While everyone’s needs are different, consumer group Which? has undertaken research that sheds some light on the issue.

A survey of more than 1500 retired couples found, on average, retired couples said they needed £18,000 a year to cover household essentials – such as food, utilities, transport and housing costs.

But for a slightly more comfortable lifestyle which allows for extras such as European holidays and leisure activities, they needed an annual income of £26,000.

The consumer group calculates that to generate an annual income of £26,000, a couple would need a defined contribution pot of £210,000 in today’s money – alongside their current state pension entitlement.

According to Kate Smith, head of pensions at Aegon, pension saving should be seen as a habit, not a chore.

She says: “An annual income of £26,000 is achievable provided people start saving early. Savings from both partners also have the added bonus of an employer contribution via their workplace pension twice over.

“Realistically, few people will be in a long-term relationship from the age of 20, so it’s important they take personal responsibility and realise the buck stops with them when it comes to pension savings.

“The key to building a good retirement pot lies in what you do in the early years to make pension saving a habit and not a chore.”