How much pension you'll need

This advice applies to Scotland. See advice for See advice for England, See advice for Northern Ireland, See advice for Wales

A pension is money you'll use to live on when you retire. Most people get a State Pension from the government, which covers your basic needs. To give you a decent standard of living, it's a good idea to save some extra money in a pension fund. 

How much you'll need to put away for your pension depends on:

  • what you can afford to save

  • how many years you have to save

  • what your needs will be when you retire

Your retirement may last from 20 to 30 years, so you may have to live for quite a long time on your pension.

Planning for your needs

If you start saving for your pension early in your working life it may be difficult to predict what your needs will be when you retire. Aim to put away as much as you can afford but don't worry if it's not as much as you'd like to start with. It can be better to save small amounts that have a long time to grow in value. If your income improves, you'll be able to increase how much you put away for your pension.

If you're starting to save later in your working life you may have a better idea of what your circumstances are likely to be. For example, you may already have a family or own a home. This can make it easier to work out what level of income you'll need for your retirement but you'll have less time to save it up, and the amount of money you'll need to save may be higher. You may need to prioritise your budget differently so that you can afford to pay extra into your pension. For example, you might cut your spending on non-essential items like going out, so that you can afford to save a bit in your pension.

Saving for your pension is a long term commitment. Work out your budget to make sure you can afford the regular payment into your pension pot.

For more information about working out your budget including an online budgeting tool, see Budgeting.

Planning checklist

Think about the lifestyle you want when you retire and the commitments you're likely to have. Your needs may change as you go through life so review what you're saving regularly to make sure you'll still be able to have the lifestyle you're planning.

When planning how much pension you'll need for your retirement, you need to think about:

  1. The cost of your home. If you own your home, your mortgage is often one of your biggest expenses. If you can pay it off before you retire, your outgoings may drop considerably. You can work out how many years it has to run. If you rent your home, you'll still have to pay rent when you retire.

  2. Your fuel bills. Gas and electric bills may be higher if you're at home more and as you get older. Make sure you budget a bit extra and find out if there's any help you can get such as a Winter Fuel Payment or energy efficiency measures for your home.

  3. Paying your debts. Try to plan for any borrowing to be paid off before you retire.

  4. Your expenses. Some expenses may be lower or disappear when you stop working. For example, you might be able to spend less on clothes, travelling expenses or lunches.

  5. The lifestyle you want to enjoy. What kinds of things will you have to pay for? Will you need more or less money for holidays? How much money will you need for hobbies or other activities?

  6. Your partner's expenses. If your pension is also supporting a partner or someone else, remember to take their expenses into account as well.

  7. What other income you'll have. For example, from other savings and investments.

  8. How the benefits system could change, particularly if your retirement is a long way off. If things change during your working life, remember to review your pension plan.

  9. Your State Pension age. This is the age at which you'll be able to claim State Pension. You can check your State Pension age on GOV.UK.

How much you'll need to save for a pension

You can use the MoneyHelper pension calculator to estimate the amount of pension income you could get from a personal, stakeholder or workplace pension when you retire. This will help you decide how much you'll need to save to get the retirement income you want. 

When you pay into a pension you get tax relief at the rate you currently pay tax. Remember this when you're working out how much to pay in.

For more information about personal, stakeholder and workplace pensions, see Types of pension.

If you can't afford to save for a pension

If you don't think you can afford to save for a pension, don't worry. Even if you can't afford to save anything now or if you're not working, start as soon as you can. Don't think because you haven't saved before that it's not worth saving later because it almost always is.

You may be able to pay extra amounts (contributions) into a pension fund when you are working, to make up for lost time.

You'll still be able to get basic State Pension and you may be able to get other help from the state, for example help to pay your rent or council tax.

Reviewing your pension needs

As you go through your working life, things may change. It's important to review your pension situation regularly, particularly when there is a change in your circumstances, for example:

  • when you get married or divorced

  • if you change jobs

  • if you can't work for any reason

If you are saving for a partner, remember to review their pension situation and needs as well.

Pension scams

Pension scams have become more common since April 2015, when new rules allowed people to take some or all of their pension pot as a lump sum. These scams are fake investments designed to con you out of your money. They are often extremely convincing and anyone can be caught out.

Find out how to avoid a pension scam on GOV.UK.

Other sources of pensions advice


GOV.UK has guidance on workplace and personal pensions.

NI Direct

NI Direct has information about pensions and retirement planning, including personal, stakeholder and workplace pensions.