How much to pay into your pension

The level of income you’ll need in retirement mostly depends on the lifestyle you hope to have when you retire.

Most people’s expectations are based on their income and lifestyle before retirement, so a general rule is to aim for an income of around two thirds of what you earned at work. Typically, you won’t need as much in retirement because you’re less likely to face costs for things like commuting, national insurance, or a mortgage.

The Pensions UK (a not-for-profit organisation) publishes annual estimates for ‘retirement livings standards’ at three levels of income: ‘minimum,’ ‘moderate,’ and ‘comfortable.’ Here are their estimates for 2025:

Visit the Pensions UK website to learn more about retirement living standards.

Even alongside the state pension, we think it's unlikely it'll give people enough in their pension pot for a comfortable retirement. It's also important to consider that what you need will depend on a few factors, including your personal situation and what kind of retirement you want.

Your personal situation

We usually recommend that most people put around 12.5% of their earnings into their pension. But the actual amount depends on your own situation. For example:

• When you start: The earlier you start, the less you'll need to save each month.
• Existing retirement savings: If you’ve already got some pension savings you may not have to save as much as someone who hasn't started yet.
• Your State Pension entitlement: The new State Pension currently pays a maximum amount of £230.25 a week for 2025/2026 to people with 35 years’ worth of National Insurance contributions or credits. 
• The income and lifestyle you want in retirement: Clearly, the higher your desired income, the more you’ll need to save.
• When you plan to retire: The earlier you plan to stop working, the more you need to save. And the later you plan to stop, the less you’re likely to need.
• How much risk you’re prepared to take: In general, people who take more investment risk can expect higher returns on their savings, so they may be able to get away with saving a bit less. But higher-risk investments don’t always lead to higher returns, and a fall in the value of your pot close to retirement may force you to save a lot more, work for longer or leave you short. 

Always remember, investment values can fall as well as rise, so you could get back less than has been paid in. Tax benefits depend on individual circumstances and are subject to change.

What’s your magic number?

The easiest way to get an estimate of what you should actually be saving is to carry out some scenario planning of your own. In a few simple steps our retirement calculator can help you:

• Get an idea of what your income might be in retirement
• See what the difference may be if you were to use a flexible income (drawdown), a guaranteed income (annuity), or withdraw your pension(s) as cash
• Adjust the amount depending on retirement age and amount paid into your pension

Before you use an online planner like this, it makes sense to gather details of all your existing pensions and get an up-to-date State Pension forecast.

If you’d like help with your investments, you can get tailored financial advice from one of our advisors or find an independent financial advisor on unbiased.co.uk. Remember you might be charged for any financial advice you receive.