· 8 min read
Saving for retirement: how much and how
State or public pensions typically replace only part of pre-retirement income, and the gap tends to be larger the higher your income. Closing it means starting early, using tax-advantaged retirement accounts where available, and sizing contributions to your real time horizon rather than to a vague sense that you'll get to it later.
1. Estimate the gap first
Start from your expected essential expenses in retirement, subtract your expected state or workplace pension income, and the remainder is what your own savings need to cover. Even a rough estimate beats no target at all.
2. Use tax-advantaged accounts where they exist
Most countries offer some form of tax-advantaged retirement account — a workplace pension, an employer-matched plan, or an individual retirement account. Contributing enough to capture any employer match is usually the highest-return, lowest-risk move available before considering anything else.
- Workplace pension or employer-matched plan, up to the match
- Individual retirement or investment account with tax advantages
- General investment account for anything beyond those limits
3. How much to set aside, by starting age
The earlier you start, the smaller the monthly contribution needed for the same eventual pot, thanks to compounding. As a rough illustration for reaching a comparable outcome by a typical retirement age:
| Starting age | Relative monthly effort |
|---|---|
| 25 | Lowest — time does most of the work |
| 35 | Roughly double the contribution of starting at 25 |
| 45 | Roughly triple, with a shorter runway for growth |
| 55 | Highest — a much larger share of income is needed |
4. Where the money goes while you're decades away
With a long horizon, the bulk of a retirement portfolio typically leans toward equities for growth, shifting gradually toward more stable assets as retirement approaches. The simulator lets you test this trajectory with your own numbers rather than a generic assumption.
5. Revisit the plan, don't set it and forget it
Review the target once a year, and whenever income, family situation or expected retirement age changes. A plan built on ten-year-old assumptions is a plan built on the wrong numbers.
Frequently asked questions
- Is it too late to start at 45 or 50?
- No, but the contribution needed for the same outcome is meaningfully higher. Starting now beats waiting further, regardless of age.
- Should I prioritise retirement saving or paying off debt?
- Clear high-rate debt first; for low-rate debt such as a mortgage, it's usually reasonable to save for retirement in parallel, especially up to any employer match.
- How much of my income should go to retirement?
- A common rule of thumb is 10–15% of income starting in your twenties or thirties, more if you start later. Your own target-gap calculation is more precise than any single percentage.