Young should save £131 a month for a secure retirement

Young workers in their twenties should save £131 a month to secure a comfortable retirement, research by Which? has found.

This is based on a survey that found, on average, retired couples need £18,000 a year to cover household essentials, but £26,000 a year to allow for extras such as a European holiday and leisure activities. The latter amount requires a defined contribution pot of £210,000 (in today’s money) alongside the state pension entitlement.

If people do not begin saving in their twenties then the monthly savings amount needed increases. It rises to £198 from 30, £338 from 40 and £633 from 50. Which? money expert Gareth Shaw said: “When it comes to saving for your retirement: start early and save often. Being a part of your company pension scheme is a good start, but, depending on how much you contribute, you could well need to save a little more to have the lifestyle you want in retirement.”

In addition, Aegon head of pensions Kate Smith added: “It’s an often repeated complaint that people don’t understand how much they need to save in a pension to secure a comfortable retirement and the figures from Which? help put this in context."

"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 that they take personal responsibility and realise that 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.”

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