🎓 Pensions Academy Lesson 6

For most people, your quality of life in retirement depends almost entirely on your pension. The more you save and the longer you save for, the more comfortable your retirement could be. So putting away enough money from an early age – and keeping that going – is crucial. But how do you know what “enough” is? 🤔 Here’s what you should consider.


How big should my individual pension pot be?


Fidelity recommends to maintain a similar standard of living in retirement as in working life, as a guide you’ll need to save 7x (times) your annual income by age 68 together with the State Pension. 

This increases to 11x if you’re looking for more luxuries in retirement, while falls to 4x if you’re looking to spend a lot less. Of course, you don’t have to stick to these milestones exactly, however it’s a good guide to get you thinking about the life you want to lead in retirement. 🏝️


How much should I save each year?

How much you save into your pension will differ based on when you start contributions. 🏁 The same Fidelity report states – if you start saving at age 25 and keep going until you’re 68, you should aim to put away 13% of your income each year before tax into a pension to give you a similar standard of living in retirement as in working life (this includes both workplace and personal pensions as a total). However, if you don’t start until your 30th birthday, the recommendation increases to 15% of your annual income, and by age 35 it jumps to 18%.


So if your combined pension contributions at work are 8% of your earnings, you need to top up with at least another 5% into that pension or another personal pension. If your income is £50,000, that means saving £2,500 a year – or £208.33 a month – on top of your workplace pension. 💰 If you are starting later in life and saving a total of 18%, this increases to £416.60 a month in addition to your workplace pension contributions. You can also try the Money Advice Service’s Pension Calculator to find out how much you should be saving.


How should I pay into my pension?


Outside of workplace pension contributions, which are taken from your salary, paying into a personal (or private pension) monthly through a direct debit or standing order is a perfect way to build up your retirement savings and ‘set and forget’. The Moneybox Pension allows you to pay into your pension via weekly, one-off or monthly payments via direct debit. You can even round up your everyday purchases and save the spare change directly into your pension! 🛍️ We’ll go into more detail about our Personal Pension in Lesson 10. 

If you’re self-employed or have variable income, setting up a direct debit from your main account may be difficult. It’s tempting to wait until you have some spare cash at the end of the month instead, but unless you’re consciously saving, you could be waiting a long time. In the meantime, you could be missing out on vital growth from your pension investments. One option is to build up your pension savings into a cash savings account that pays some interest and then drip-feed into your pension from there when it’s right for you.


🎓 Wondering how your pension savings could change based on the age you get started? In the next lesson, we share our top tips to help on how to start saving for retirement in your 20s, 30s and 40s+.



As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to 57 in 2028). If you’re not sure whether the Moneybox Pension is right for you, a suitably qualified financial adviser can help you decide. Moneybox Personal Pension T&Cs Apply.