Set a target
A common rule of thumb is that you can take about 4% of your pension pot each year. Turned around, that means you need about 25 times the yearly income you want from it:
| Income you want from your pot | Target pot |
|---|---|
| £5,000 a year | £125,000 |
| £10,000 a year | £250,000 |
| £15,000 a year | £375,000 |
That’s on top of the State Pension: the full new State Pension is £241.30 a week (£12,548 a year) in 2026/27. You usually need 35 qualifying years of National Insurance for the full amount, and you can check your forecast on GOV.UK.
Start as early as you can
The same habit adds up to very different amounts, because money saved early has longer to grow:
- Starting at 25 About £6,141 a year at 4%
- £153,533
- Starting at 35 About £4,321 a year at 4%
- £108,033
- Starting at 45 About £2,750 a year at 4%
- £68,741
Starting at 25 instead of 45 gives you about 2.2 times as much
Assumes 3% pay rises a year and steady average growth after fees. Today’s money takes off inflation, so the figures show what the savings would buy now.
Try your own numbers:
After 30 years you’d have
£200,903
- You put in£72,000
- Growth£128,903
Start ten years later and you’d have £92,408: £108,495 less, though you’d only put in £24,000 less.
Returns aren’t guaranteed and vary from year to year. This assumes the same return every year, before fees and tax.
How much to put in
- Don’t opt out of your workplace pension. You’d lose your employer’s contributions.
- Ask about matching. Some employers pay more if you do, for example 5% if you put in 5%.
- Raise it each year, for example by 1% of your pay, or each time you get a pay rise.
- Use the tax relief. Your contributions get relief at your top rate of Income Tax, so £100 in your pension costs a basic-rate taxpayer £80, and a higher-rate taxpayer £60.
Check the fees and where it’s invested
Most workplace pensions put you in a default fund. That’s fine for many people, but check two things once a year: the yearly charge, and whether the fund suits how far you are from retirement. On £10,000 invested for 30 years at 7% growth, a 1% yearly charge instead of 0.1% costs about £16,600: see index funds vs stock picking. If you’ve changed jobs, find old pots with the government’s free Pension Tracing Service.
When you can take it
You can usually take money from a workplace or personal pension from 55, rising to 57 from 6 April 2028. Up to 25% can usually be taken tax-free, up to £268,275 in total; the rest is taxed as income. The State Pension starts later, at your State Pension age: see the State Pension explained.
Work out your own number
Our pension calculator shows what your pension could grow to, your tax relief, and your tax-free lump sum.