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How much do I need to save for retirement?

Important information: the value of investments and income from them can go down as well as up so you may not get back what you invest. Eligibility to invest in a SIPP and tax treatment depends on personal circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP until age 55 (57 from 2028). It’s important to understand that pension transfers are a complex area and may not be suitable for everyone.

It’s a tough question, and one that’s not only asked by older people but by many younger workers too. What you really need to know is how much you need to save, and by when. If you know these things you can begin to get your finances fit for retirement.

Further down we’ll show you how to do that but, if you want a quick answer, Fidelity’s research1 found that UK households who manage to save seven times their annual household income by the age of 68 should be able to retire and maintain a similar standard of living as in their working life. Please note that the figures quoted are generic assumptions and estimations; they are not personalised and are not a replacement for professional advice. They’re based on average household incomes in the UK with typically two working adults and two state pensions. They may not represent what will actually happen in the future, because no one knows that. You can, however, use the figures quoted as high-level guidelines to retirement planning and saving. You can read how we do our calculations at

While a goal of seven may sound challenging, the key is to start as early as possible and aim to meet a series of savings milestones along the way. Our analysis1 suggests UK households aim to have at least one times their annual income by the age of 30. Here’s a further breakdown by age.

Age Income Multiple
30 x1
40 x2
50 x4
60 x6
68 x7

How much income do you need to live on in retirement?

To plan your retirement target more precisely, this is the first question to answer. The reality is that you are likely to have less income to live on in retirement than in your working life. But the good news is that your living costs are likely to be lower as well.

With some luck you will have cleared any debts by the time you stop working, including having no mortgage to pay. Children will be grown up and should now need less financial support and there’s some tax advantages - no National Insurance to pay after you reach your State Pension Age, for example - and social security entitlements which means you can keep more of your money.

And remember - when you are working a proportion of your salary may be taken up by savings contributions, whether into a pension or elsewhere. These can be reduced or stopped in retirement.

It’s sometimes said that you’ll need a retirement income that is two-thirds of your pre-retirement income to maintain your standard of living. 

Recent research from the Pensions and Lifetime Savings Association2 found that a single person will need roughly £23,300 a year to achieve a moderate living standard in retirement, and £37,300 for a comfortable one.  This is a good goal to have in mind but may be tough for many to reach.

It can be helpful to work out what your costs in retirement may be. Use a tool like Fidelity’s Retirement Calculator. It lets you enter amounts you think you’ll spend on various essential and non-essential items, like food, holidays, car running costs and entertainment.

It’s a simple tool but useful in giving you a cash estimate of the income you may need each year.

How much State Pension will you get - and when?

Most people will be able to rely on the State Pension to provide some of their retirement income. The current full State Pension income is £203.85 a week and this is hugely valuable because the income is guaranteed and will rise broadly in line with the cost of living. That means it can be there to cover the most essential costs, like housing, bills and food.

You can check to see if you are on course for a full State Pension by using the Government’s forecasting tool. You also need to know when your State Pension will begin. You can find that out here.

Working out other sources of guaranteed income

Along with the State Pension, some people will be able to rely on other guaranteed income in retirement, for example from Defined Benefit pensions or buy-to-let property. Just like the State Pension, this is valuable because you can rely on it to cover your essential needs so you won’t have to use pension savings to provide that income.

How much income will your pension savings give you?

Once you have an idea of what your costs in retirement will be, and the guaranteed income you’ll have to meet them, you can work out how much work your pension savings will have to do on top - and whether they will be enough. Be warned - this can be a shock!

Fidelity’s MyPlan tool can show you the kind of pension pot you’re headed for, and an estimate of the income this will provide.

These are the results for a person aged 45, earning £60,000 a year, with £100,000 already saved and setting aside a further £700 a month for their retirement. They have selected a moderate investment style, and have specified that they would like to replace 60% of their pre-retirement salary with retirement income when the retire at 68, and they have other sources of income in retirement worth 10% on their current income.

All these variables can be changed in the tool to see what effect they have. MyPlan works out that they would need a pension pot worth £409,000 to achieve their goals. These figures relate to past performance and are not guide of what might happen in the future.


The full assumptions and methodology for MyPlan can be found at

Based on the same calculations and savings assumptions as the example above, the tool also shows you the results in terms of the income you could expect. It is based on purchasing an annuity but bear in mind that there are several different ways to turn your pension savings into an income. (See below)

Enter your details to see how your saving stacks up. If the results show you coming up short, don’t worry. By altering your level of savings, your retirement age and the level of risk you take with your pension pot, you may be able to bring things back on track.

If more drastic action is needed, consider how you’ll manage on a lower proportion of your current salary in retirement.


What kind of income might suit you best?

There are different ways to turn your pension savings into an income. You could consider using pension drawdown an annuity or a combination of both. There’s a full explanation of the ways to access your pension savings here.

Pension drawdown allows you to take the income you want, whenever you need it - giving you total flexibility over your retirement savings. As your money remains invested, it has the potential to continue to grow and provide for your future (although this isn't guaranteed). It'll keep benefitting from tax efficiencies too. It can also be passed onto your loved ones when you die without Inheritance Tax applying.

Annuities provide you with a lifelong, regular income that is guaranteed to last as long as you live, providing peace of mind. However, unless you choose an increasing annuity, the income you receive will remain the same each year, therefore with the effects of inflation, it will buy less as the years go by. Also, you won’t benefit from economic or stock-market growth.

How to turn your pension savings into an income needs to be carefully considered. The Government offers a free and impartial guidance service to help you understand your options at retirement. This is available via the web, telephone or face-to-face through the Pension Wise service which is now part of MoneyHelper; the easy way to get free help for all your pension and money choices. You can find out more by going to  or call them on 0800 011 3797.

You might also find it helpful to get support with from Fidelity’s Retirement Service. Our retirement specialists can provide free guidance to help with decisions or paid-for advice with personalised recommendations based on your circumstances. And we can also support with bringing your pensions together, for easier access to your retirement savings if you decide this is right for you. Simply call 0800 368 6882 or visit Fidelity retirement service to find out more.

Important information: Please note that this information and our guidance tools are not a personal recommendation in respect of a particular investment. If you need additional help, please speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.  You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.

1Fidelity International’s Retirement Savings Guidelines Sept 2020.
2Pensions and Lifetime Savings Association – UK Retirement Living Standards November 2022.

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