£824 a MONTH: The shocking cost to save a decent pension

The average 30-year-old must save more than £800 to retire at 65

The average 30-year-old must put away a huge £824 a month if they want to retire at 65 with the recommended level of pension income, estimates have found.

Starting the savings just one year later at 31 would increase the payments to £887 a month, said the deVere Group, which did the calculations.

The alarming figures equate to half the take-home pay of Britons aged between 20 and 29 or a third of the earnings of 30-somethings, according to the most recent data from the Office for National Statistics (ONS). 

It comes after the ONS revealed that the number of people paying into an occupational pension has dropped to a 60-year low. Only 35% of men and 32% of women under the age of 65 paid into a private pension during 2011/12.

“Even those who are paying in are not contributing nearly enough,” said deVere Group’s chief executive Nigel Green.

The sums are based on a person with the UK’s average salary of £26,500, retiring at 65 with a pension income of 75% of their pre-retirement earnings. It assumes no current savings, annual inflation of 3%, as well as pre-retirement investment returns of 5%, and post-retirement investment returns of a more conservative 3%.

“A 40 or 50-year-old under the same conditions, would to need save significantly more than this in order to reach the same outcome,” added Green.

However, the figures were said to be “over-cooked” by Tom McPhail, head of pensions research at Hargreaves Lansdown.


“A 30-year-old is unlikely to retire at 65,” he said, adding: “They don't mention the state pension, which will deliver £7,500 a year.”

He added that an income equivalent to 75% of pre-retirement savings is pretty high, and a target of two-thirds would make more sense for someone on that level of earnings.

Despite the drop in savings, recent findings from Scottish Widows showed that expectations of income in retirement are still increasing. It found that fewer than half of those who could and should be preparing financially for their old age are saving enough.

You can work out how much you should be saving, depending on when you want to retire and on what income, on the Money Advice Service website.


“Many younger individuals delay starting a pension plan as they presume they will earn more money later in their careers and will then find it easier to fund a pension.  While disposable incomes generally rise in the later part of an individual’s career, by then it may be too late to adequately fund a pension scheme that will provide them with sufficient income to sustain their pre-retirement lifestyle,” commented Green.