Exactly how to retire at 45, 50, 55 or 60 years old: This is how much you need to have saved in your pension at every age

Exactly how to retire at 45, 50, 55 or 60 years old: This is how much you need to have saved in your pension at every age Many of us dream of retiring early and living a life of Saturdays, free to spend more time doing the things we enjoy with our family and friends. The prospect of waiting to retire until 67 – the official age at which the state pension starts to pay out – can seem unappealing, particularly for younger workers. Gen Z, those below the age of 29, are three times more likely to want to retire before the age of 55 than the rest of the population, according to research by Skipton Building Society. But even if you just want to shave a few years off a long career, you will need to do some meticulous planning – and significantly increase the amount you are saving. Fail to and you run a real risk of running out of money during retirement or even having to return to work again. You can access pension savings from the age of 55 (or 57 from 2028) – but that money has to last for decades. So how much do you really need to tuck away if you want to retire at 45, 50, 55 or 60? Even if you log in to see how much you have in your pension pot, it can be tricky to know if you are setting enough aside and what kind of life that will afford you in retirement. Work out how much you will need in retirement The first step in any sensible retirement plan is to work out how much you will need to live the life you want in retirement. A single person needs an income of £32,700 a year to be able to afford a decent retirement, according to a widely used pension industry benchmark from trade group Pensions UK. This 'moderate' lifestyle is enough to pay for the essentials and some extras, such as an overseas holiday each year, a long weekend break in the UK, one takeaway a week and eating out a couple of times a month. This £32,700 figure will rise with inflation over your planned retirement, so your pension pot will need to be large enough to cover price rises too. If you leave your pension invested in the stock market and bonds, your pot should continue to make returns. The prospect of waiting to retire until 67 – the official age at which the state pension starts to pay out – can seem unappealing We asked Marianna Hunt, personal finance expert at pension and investment group Fidelity International, to crunch the numbers so you can see if you are on track to retire with this kind of lifestyle at an early age – and how much you need to be saving each month to make it happen. The calculations assume that you draw down from your pension in retirement, taking out enough to meet the 'moderate' lifestyle and, at state pension age, you receive a full state pension. If you want to retire at 45 Few of us are lucky enough to retire at the age of 45. You need to have a significant sum set aside to do so. Marianna Hunt says: 'It is hugely ambitious for someone on a £50,000 salary to plan to retire at 45 and it's unlikely to be feasible unless they manage to achieve a very high savings rate and/or receive some kind of windfall or inheritance that boosts their savings pots.' If you retire at 45, the pot will need to last 34 years of retirement if you're a man or 38 years if you're a woman, on average. This would see you through to ages 79 and 83 respectively, the average life expectancy in the UK. Financial advisers usually recommend budgeting enough to live until your 100th birthday because you would not want to run out of money part-way through retirement if you live longer. Your pot of cash will also have to be robust against the effects of inflation. The £32,700 needed today for a moderate retirement will need to grow to more than £127,000 a year by 2081 to pay for the same lifestyle if inflation rises at 2.5 per cent a year on average over the next 55 years. As you can't access your pensions until age 55 or 57, you will need to build a large Isa to bridge this gap. You will also have to wait at least 22 years before you start to receive the state pension. Hunt says: 'These numbers may look daunting, particularly for someone hoping to stop work very early, but that shouldn't put people off the idea of saving for an earlier retirement.' You should receive tax relief at your marginal rate on any money you save into a pension and your employer will make contributions. You may receive bonuses, pay rises and inheritances along the way, which can all help towards your savings goal. The earlier you start to save, the easier it will be to hit this target. Helen McGinty, head of financial advice distribution at Skipton Building Society, says: 'One of the biggest advantages younger generations have is time when it comes to pension savings. 'Building gradually through consistent habits over many years can help put you in a stronger position later on.' Someone currently aged 25 earning £50,000 a year needs to be putting £1,080 into their pension and £900 into their Isa each month, according to Fidelity. Hunt says: 'The pension contribution figures can also look frightening at first glance but, importantly, they include employer contributions. If you work for an employer that contributes substantially more than the minimum, that can make an enormous difference to how much you personally need to put aside.' To retire at age 45 and be safe in the knowledge you won't run out of money until the age of 100, a 25-year-old today should aim to save a total £1.48million in their pension and Isas, Fidelity says, when accounting for inflation. This assumes that before retirement, investments are held in a high-growth portfolio returning 6.61 pc a year. At retirement they move into a moderate-growth portfolio assumed to return 6.45 pc, while fees are 0.41 pc. Even if you just want to shave a few years off a long career, you'll need to do some meticulous planning A 30-year-old on a £50,000 salary who is hoping to retire in 15 years' time needs to be on an even bigger savings mission. To be on track to retire, they should have £70,000 in their pension and £70,000 in an Isa. They will need to be saving £1,400 a month into Isas and £1,125 a month into their pension. Someone aged 30 will need £1.2million in their pension pot by the age of 45, Fidelity says. If you're 40, even with a higher £60,000 salary, planning to retire in five years' time requires serious sacrifice. To be on track, you will need £240,000 in a pension and £240,000 tucked into an Isa. You will need to be setting aside £1,500 a month into an Isa and £1,650 a month – the equivalent of 33 pc of a £60,000 a year salary. This will give you a total pot of £785,000 by your 45th birthday, which will be enough to see you through to your 100th birthday. If you want to retire at 50 If you hope to retire at 50, official statistics show you could expect your retirement to last 29 years if you're a man and 33 years if you're a woman. But it's still important to budget for 50 years, up to age 100, to be safe. You will have to wait at least five years until you can access your pensions so you should be saving into an Isa as well to tide you over. If you are 25 earning £50,000 a year, you should be contributing £1,042 into your pension and £390 into an Isa each month. This will give you £1.62million by age 50, enough to live a moderate lifestyle. A 30-year-old should have already stashed away £60,000 in a pension and £60,000 in an Isa if they want to retire 20 years later. By contributing £1,083 into their pension and £500 into an Isa every month, they will hit the £1.36million they need by 50. At 40, you should have saved £200,000 in a pension and another £200,000 into an Isa. Your Isa will already be big enough to bridge the gap during the early years of retirement so you should just focus on saving into a pension. You will need to pay £1,125 a month into your pension to reach the target £1million by age 50. If you want to retire at 55 This is a popular target age for early retirement because it's when you can start to access your pensions for the first time – although this 'minimum pension age' will rise to 57 in April 2028. A 25-year-old who wants to retire at 55 should aim to pay a more manageable £1,000 into their pension and £90 into an Isa each month to hit a target £1.8million after 30 years of working, Fidelity calculates. If you are 30, you will be on track if you have £40,000 in an Isa and £50,000 in a pension already. You would then need to be saving £792 into a pension and £250 into an Isa each month to reach your £1.4million goal. A 40-year-old should have £200,000 each in a pension and Isa. From this age on, they need to be saving £1,375 into a pension each month to accrue £1million by 55. At this point, savers would be better off focusing on paying into their pension rather than an Isa, where they can benefit from tax relief and employer contributions. If you want to retire at 60 For those who haven't yet started to squirrel money away seriously but still want to retire early, retiring at 60 is more attainable. Sixty used to be the norm for retiring but today you will have to wait at least seven years before receiving the state pension. Those with a retirement date of 60 in mind should focus on saving into a pension rather than Isas, as they will be able to access them already and pensions contributions benefit from more perks. This includes tax relief on any money you save and contributions from your employer. If you're 25 today and earn £50,000 a year, then you should save £833 into a pension a month, Fidelity calculates. This will give you £1.94million by age 60. A 30-year-old should have £60,000 in retirement savings. They will be able to retire at 60, with a pot worth £1.5million if they put £750 a month into their pension. If you're currently 40 years old, you should have £60,000 saved into an Isa and the same amount in a pension. You won't need to contribute to your Isa any more but should be setting aside £1,042 a month into your pension. If you're 50, you should have £130,000 in pensions and £130,000 in Isas. From then on, you'll need to save £1,417 a month into your pension to be able to retire ten years later, Fidelity calculates. This is the equivalent of 34pc of a £50,000 salary. You can stop paying into your Isa as your pension will be sufficient to live on – and you will be able to access it from the day you retire.