How 'big' a pension pot do I need for a comfortable retirement?

wheelbarrow on a garden path

Sarah Austin, Independent Financial Adviser from Martin-Redman Partners, discusses how to calculate how 'big' a pension fund you will need to meet your lifestyle needs in retirement.

She writes:

I was speaking on BBC Radio Cambridgeshire this week on their Money Show, and one of the questions that came up from a listener was ‘how big a pension pot do I need for retirement?’

My answer was, and is, that to know how big a pension pot you will need is very personal to you and the lifestyle you would like. To work this out;

1)     First; think about how much income you will need to support your desired lifestyle in retirement, taking into account that some costs such as debts will have disappeared and other costs such as discretionary spending and holidays may increase.

2)     Next; decide what age you want to partly or fully retire at.

3)     Note how much you are currently saving into your pension per month, whether this is personal or employer contributions (or both).

4)     Then pull together values for all the pension or savings policies that you currently have, to give you a starting point in ‘today’s’ money.

5)     From the four above pieces of information we can build projections, using various relevant assumptions such as growth rates on your pensions and other investments and the effect of inflation.

6)     This will tell you either you are currently on track, or need to save more into your pension – with a guide monthly contribution. If this is too high, increasing it to a level you can afford is always worth doing and considering increasing them when you receive a pay rise.

A large part of what we do as Independent Financial Advisers (IFAs) when providing pension advice is helping our clients work through the above steps to provide a clear framework to build a ‘big’ enough pot of money to support them in retirement. It is very much your retirement plan, which clients can base financial decisions on and which we can review, and amend as your situation changes.

But I think the biggest benefit of working with a financial adviser is your peace of mind, along with someone who can explain pensions in detail and manage your investments according to your attitude to investment risk. Managing risk is an important part of what we do as IFAs; so you are not taking too little (and losing out on potential growth) or too much risk (and exposing yourself to falls in the value of your pension, as the market goes up and down, that you are not comfortable with).

As with any financial plan, it needs reviewing at least annually as your circumstances will change, the economy and investment markets will change and your feelings on when and how you will retire will also likely change. These regular reviews allow time to make changes to the pension plan so you stay on track.

To finish off, I read a newspaper article on the subject at the weekend which detailed:

·        56% of people are not confident they are saving enough into their pensions to let them live the lifestyle they want in retirement

·        24% don’t know

·        20% said they were saving enough.

I could only but wonder if some, or all, of the 20% who were confident - had taken financial advice and worked through a retirement plan with a financial adviser, to gain that peace of mind?

Arrange an initial meeting to discuss your pension planning

Please contact me at or call me on 01223 792 196 to arrange an initial appointment, at no cost to yourself to discuss your pension and retirement planning.

About Martin-Redman Partners

We are a team of experienced Independent Financial Advisers who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice.

We offer expert independent financial advice throughout Cambridgeshire, Leicestershire, Suffolk, East Anglia and the South East.  Many of our clients are within, or are in the surrounding areas of Cambridge, Grantham, Stamford, Bury St Edmunds, Frinton on Sea, Ely, Peterborough, Huntingdon, Cambourne, Newmarket, Soham and Oundle.

The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.


We provide independent financial advice on investments, pensions, inheritance tax planning and protection. We work with private individuals, businesses and professional introducers, such as accountants and solicitors, to ensure our clients financial advice needs are met.

Martin-Redman Partners