It's important to think about how much money you might need in the future and whether you'll have enough to give you the lifestyle you want. You might be eligible for the State Pension but can you manage on this alone? Also, you may want to retire before your state pension age.

Making the right choices now could make a big difference to how much money you have in the future and saving into a pension plan could help you achieve the lifestyle you would like.

What do I need to consider when saving for my retirement?

How much income will I need?

Estimate your future living expenses based on the lifestyle you want to maintain. Typically, you'll need between half and two-thirds of your final salary to live comfortably after retirement, considering you might have fewer expenses like mortgage payments or commuting costs.

This is perhaps the biggest question – just how much will I need to live on when I’m older? It can be tricky to gauge because it depends on a few variables. But a good start is to consider the type of lifestyle you want to lead when retired and how much annual income you might need to finance it.

Many people overestimate how much they’ll need to live on in retirement, thinking that they'll spend the equivalent of their wages.

The common perception is that you’ll need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire.

This is because as you might have paid off the mortgage, will no longer be bringing up children and won’t face the cost of commuting once you've retired.

At what age do I want to retire?

The state pension age for men and women will be 67 by 2028, but your workplace or personal pension may have different terms and ages. You could also choose to retire earlier or later. Working out a planned retirement date can help you decide how many years of work you have left. This can help determine how much you’ll need to save and invest for retirement.

What risk level am I happy with?

Where you invest or save your money will help determine how much you’ll get back in retirement, but there will be varying degrees of risk. Savings accounts are on the low risk side but are likely to pay lower returns and the cash value could be eroded by inflation. Taking too much risk could leave you vulnerable to big drops in the value of your investments. Too little risk could mean your investments don’t grow quickly enough to meet your goals. Bit of a catch-22, right?

Start by thinking about your circumstances, your goals and how you feel about the value of your investments moving up and down. That’ll help you join the dots and decide what level of risk could be right for you.

Decide on your investment risk tolerance. Lower-risk options like savings accounts offer stability but lower returns, while higher-risk investments can grow your savings faster but come with greater volatility. Consider your financial goals and how you feel about potential fluctuations in your investment value.

How much money do I need to retire?

How much money you need saved to retire depends on your outgoings and the level of lifestyle you want to lead. There is no defined figure to aim for. For example, while retiring aged 65 with £600,000 could work for some, others may feel they can retire comfortably with less at a younger age.

At what age should I start saving for my retirement?

The earlier you start saving for your retirement the better because it gives more time for your money to grow. Saving small amounts regularly will soon start to add up over the long term. Also if you want to take more risk with stock market investments the longer your time frame for investing the better – as this can spread out the peaks and troughs in the market. That said, it’s also never too late to start saving for your retirement.

The following examples are calculated using a pension calculator. They have assumed your employer will contribute £100 per month and you’ll retire at 70.