BRITS need to put aside £275 a month for a ‘comfortable retirement’, a new study has found.
Experts say this could build a £560,000 pension pot by 67 — £20,000 more than the official benchmark for a comfy lifestyle in 2025.
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The Pension and Lifetime Savings Association (PLSA) reckons a single person needs £540,000 for a good standard of living by 2025.
Rotimi Merriman-Johnson, from Mr MoneyJar, said: “Many people feel overwhelmed by pensions, but thinking about your future finances doesn’t have to be daunting.
“The key is understanding how advantageous it can be to start investing in your pension as early as possible, to take advantage of the power of compounding.”
And workers don’t need to stump up the full amount from their own salary.
Under auto-enrolment, eight per cent of gross pay is already funnelled into a pension — four per cent from the employee, three per cent from the boss, and one per cent from government tax relief.
The warning comes after a survey of 1,000 Gen Z adults, aged 18–28, found that more than half (53 per cent) have not started saving.
Worryingly, one in five confessed they hadn’t even thought about their pension.
Yet nearly two-thirds, 63 per cent, believe they will still retire comfortably.
Most expect to start taking their pension seriously at the age of 34.
But money is a major barrier.
More than a quarter (27 per cent) said they don’t earn enough to save, while 16 per cent admitted they’ve never been told how pensions actually work.
And 62 per cent said retirement feels far too distant to worry about.
Rajan Lakhani, head of money at Plum, said: “Forward planning can literally make a world of difference to how you’ll live your life.
“But it seems it’s not very high on the agenda for young people and our research shows this could be down to lower salaries and lack of knowledge.”
The study also showed that 11 per cent don’t understand pensions at all, while another 32 per cent only know a little bit.
One in three want clear guidance on how much they need to save.
Nearly a quarter said they’d like an app or tool to guide them through the process.
But one in ten said they’d rather travel and enjoy their money while they’re still young.
There is some good news.
A huge 85 per cent of youngsters said they know that small, regular contributions add up over time.
On average, they believe they need to save £306 a month, including employer contributions, to retire comfortably — a figure close to the expert recommendation.
Rotimi added: “Saving money into your workplace pension also nets you ‘free money’ in the form of employer contributions and crucial tax relief from the government.
“Don’t underestimate the impact that consistent, forward planning, and making the most of all available benefits, can have on securing the retirement you deserve.”
Experts also suggest looking at Lifetime ISAs, which offer a 25 per cent government bonus of up to £1,000 a year.
Rajan said: “Starting early with even small deposits is key as these add up considerably by the time you reach that stage.”
STATE PENSION BASICS
AT the moment the new state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
It is a recurring payment from the government most Brits start getting when they reach the state pension age.
However, not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
The full rate of the new state pension is £221.20 a week – or £11,542 a year.
Under the old system, the full basic state pension is £169.50 per week and is paid to those who retired before April 6, 2016.
State pension payments went up by 4.1% in line with wages in April 2025.
This means someone on the full new state pension will see their payments rise by around £473 a year next spring.
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