Planning your retirementRetirement countdown

Saving for your retirement

In the table below, we give you an idea of how much you may have to save each month to provide an income of £5,000 or £10,000 a year when you retire.

You will probably also receive the state pension – £4,953 a year for a single person in 2009-2010. For example, a 40-year-old man who wants a retirement income of £10,000 plus the state pension needs to save £290 a month – nearly £3,500 in the first year.

How much men and women need to pay in each month
Pension income	Retirement age	Men	Women
Getting a pension of £5,000
Aged 30	68	£74	£85
Aged 40	67	£145	£162
Aged 50	66	£330	£371
Getting a pension of £10,000
Aged 30	68	£149	£170
Aged 40	67	£290	£324
Aged 50	66	£661	£741

Table notes

Figures should be used as a guideline. The table assumes investment growth of 4.5% a year above inflation at 2.5%, less charges of 1.5% for the first 10 years and then 1% thereafter. Also pension contributions increase by 4% a year based on an average yearly earnings' increase of 1.5% above RPI. Figures assume 20% tax relief on contributions. The income shown in the table is a single-life pension, which increases annually in line with price inflation.

Overall, the message is simple – the earlier you start saving for retirement, the less you have to put away.

A picture of an hourglass that has just started

Time to take stock

Up to 10 years until retirement

Work out what you’ll need to live on in retirement. Don’t forget to exclude things like your mortgage – if it will be paid off by the time you retire – and travel to and from work. Make an allowance for extras such as increased utilities bills and perhaps more frequent holidays
You'll need to work out how much pension you can expect to receive from your present and past providers or employers. Ask them to send you an up-to-date statement
You'll also need to get a forecast of your state pension which you can do through the Pensions Service.
Add your pensions together to see whether there is a shortfall. There probably will be, so decide whether you can save for your retirement – any amount can make a difference. However, if you expect to have a very low income in retirement, find out whether savings will affect means-tested benefits (see Contacts)
Take financial advice on where to put your savings – a pension might not be the best place. Get the financial adviser to check that your current pensions and savings are working hard enough. If you contracted out of the state scheme, ask your adviser whether this is still the best option.

A picture of an hourglass that has half way to go

Time to consolidate

Up to five years until retirement

Consider moving any stock-market investments (including pensions) to safer havens to avoid losing out if there are any last-minute falls. If necessary, get help from your financial adviser. See our guide to choosing a financial adviser
Get another state pension forecast and, if necessary, pay voluntary National Insurance contributions to make sure you get the full state pension. Check first to see whether you need to by speaking to either the National Insurance Contribution Office or The Pensions Advisory Service for more information
Start paying off debts
Make a will if you haven’t already (see our guide to writing a will)
Further increase savings towards retirement if you can, unless doing so will affect any means-tested benefits you are entitled to
Track down your old pensions. Get help from the Pension Tracing Service if necessary.

A picture of an hourglass that has almost run out

Time to do it

Six months until retirement

Contact your current and previous pension providers to find out what your final pension will be and how it will be paid to you
Make an appointment with a specialist independent financial adviser for advice on getting the most income out of your pensions. Tell the adviser if you are in ill health or smoke – this could mean more income
Let your tax office know you will be retiring in six months’ time
If you are deferring taking your state pension, let the Pensions Service know
Planning to continue working part time? Make sure your employer knows when you are over state pension age, as you do not need to pay any National Insurance contributions
Contact your local authority to register for free travel – it’s available from age 60 for both men and women
At least four months before retiring, you should receive a pack telling you how much state pension you'll receive. If it doesn't arrive, contact the Pension Service on 0845 066 0265.

Need more information? The Which? book Finance Your Retirement shows you how to maximise your pension and boost your income by using state benefits, savvy investments and by exploiting extra sources of income.

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For a complete guide to making the most of your pension, read the Which? Essential Guide: Finance Your Retirement .