# How much money do you need to save for retirement in the UK?

Trying to figure out how much money you need to save to retire comfortably can seem like a challenge at first, but it doesn’t have to be.

Today I’m going to highlight several tricks and tools you can use to plan for the future and make sure you have enough saved to retire in comfort when the time comes.

## Step one

The first step in figuring out how much you need to save for retirement is to work out what sort of retirement you would like.

Pensions experts suggest you’ll need between half and two-thirds of the salary you earned before retirement to maintain your lifestyle, although this isn’t particularly helpful if you are trying to calculate an exact figure and you still have several decades to go before retirement.

The consumer group Which? and The Joseph Rowntree Foundation have put together some more concrete figures on the matter.

When surveyed, Which? members say they need on average £26,000 per year, per household to retire in comfort, including an annual holiday and regular meals out. The Foundation’s figures suggest that for a basic retirement a single person needs £11,100, although this assumes the person has no mortgage or rental costs and is relatively frugal.

## Step two

When you have decided on your required level of income in retirement, the next stage is to work out how much you need to save to be able to afford this income.

According to pension provider Scottish Widows, a person aiming to achieve an annual income of £23,000 in retirement, will need to put away £443 a month from age 35 and £724 a month from age 45, which gives a rough guide.

Another method you can use to calculate your required personal level of income is to use the multiply by 25 rule. This rule estimates how much money you’ll need in retirement by multiplying your desired annual income by 25.

So, if you are looking for an annual income in retirement of £26,000 a year according to this rule, you will need to have saved £650,000 by the time you come to retire.

## Step three

The above example is a bit misleading because it fails to take into account tax benefits and the State Pension. The current rate of State Pension is £168.60 a week or £8767.20 a year. After including this, my figures tell me a saver would have to put away £430,820 to retire comfortably on £26,000 a year.

To reach this target of £430,820, I calculate a person will need to put away £430 a month from age 35 assuming an annual return of 6% on their money, that is excluding the tax benefits received by investing through a SIPP.

For basic rate taxpayers, the government adds 20% tax relief to any SIPP contributions. In this case, to make a gross pension contribution of £430, a contribution of only £344 is required to which the government will add £86.

## The bottom line

So overall, how much money you need to save for retirement in the UK depends on the lifestyle you want when it is time to retire.

By using the tips above, you can put together a rough estimate of how much you will need to save before you decide to quit the rat race and how much it will cost you every month.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.