Before you start
- Your recent payslips and bank statements
- Pension statements, if you have any
- Your national insurance, social security or tax ID number (to check state pension records)
Method 1 Work out what you’ll need
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Step 1: Picture your retirement
Think about when you want to stop working, where you’ll live, and how you’ll spend your time. Will you travel, support family, or work part-time?
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Step 2: Estimate your spending
List your current essential costs (housing, food, utilities, transport, health) and adjust for retirement: some costs fall, such as commuting, while others, such as healthcare, may rise.
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Step 3: Use a rule of thumb to start
Many people aim for a retirement income of around two-thirds or more of their pre-retirement income, but your own budget is a better guide.
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Step 4: Remember inflation
Prices rise over time, so the amount you need in 20 years will be higher than today.
Method 2 Check what you’ll get
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Step 1: Get your state pension forecast
Most countries have a state, social security or national pension scheme. Check your record and forecast on your government’s official website to see how much you could get and from what age.
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Step 2: Fill gaps in your record
Some schemes let you pay voluntary contributions to fill missing years. Check whether this is worthwhile for you.
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Step 3: Review workplace pensions
Read your annual pension statements: how much is saved, how it’s invested, the charges, and the projected income.
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Step 4: Find old pensions
If you’ve changed jobs, track down old workplace pensions using your old employer, the pension provider, or your country’s official pension tracing service.
Method 3 Close the gap
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Step 1: Join your workplace scheme
If your employer offers a pension, join it. Contribute at least enough to get the full employer contribution or match; otherwise you’re turning down part of your pay.
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Step 2: Start early and save regularly
Money saved early has longer to grow. Regular monthly saving, even small amounts, adds up over decades.
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Step 3: Increase with pay rises
When your pay increases, raise your pension contribution by part of the rise.
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Step 4: Use tax advantages
Many countries give tax relief or tax-free growth on pension savings. Check the rules and limits that apply to you.
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Step 5: Check charges
High fees reduce your savings over time. Compare charges when choosing or reviewing pensions.
Method 4 Prepare for the move into retirement
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Step 1: Clear debts
Aim to pay off high-interest debts and, if possible, your mortgage before you stop working.
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Step 2: Keep an emergency fund
Hold several months of spending in easily accessible savings for unexpected costs.
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Step 3: Understand your options
Learn how you can take money from your pensions in your country (for example a regular income, lump sums, or a combination) and the tax on each option.
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Step 4: Plan health and care costs
Find out what health care and long-term care costs are covered, and what you may need to pay yourself.
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Step 5: Update your will and nominations
Make or update a will, and tell your pension providers who should receive your pension if you die.
Troubleshooting
I’m starting late
It’s still worth saving. Increase contributions as much as you can, consider working a little longer or part-time, and focus on clearing debts.
I’m self-employed
You won’t get an employer pension, so set up a personal pension or retirement account and pay in regularly, such as a fixed percentage of each payment you receive.
I can’t find an old pension
Contact your previous employer or use your country’s official pension tracing service. Have your old employer’s name and dates of work ready.
Frequently asked questions
When should I start saving for retirement?
As early as possible, ideally with your first job. Even small amounts grow significantly over time.
How much should I save?
A common guide is to save a percentage of your income equal to roughly half your age when you start, but any regular saving helps. A pension calculator gives a more personal estimate.
Is the state pension enough to live on?
For most people, it provides only a basic income, so personal and workplace savings are important.
Summary
Estimate what you’ll need, check your state pension forecast and workplace pension statements, and close the gap by joining your employer’s scheme, saving regularly and increasing contributions as your pay grows. Track down old pensions, clear debts before retiring, get regulated advice for big decisions, and never respond to pension cold calls.
