How to set a goal for retirement

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We all know saving for retirement is important – but how much should you be aiming to save? Setting a goal can help to keep you on track and set you up for success in later life. So, here are five steps to help you get started.

1. Get your starting point

The first step is to check in on your pension plan and find out where you’re starting from; how much have you saved already? And don’t forget, you might have other pension plans from old jobs to factor in as well. 

You might find it easier to have everything in one place, so you could consider bringing your plans together. This won't be right for everyone, though. You could lose money by giving up any guarantees or benefits you might get from other pension plans, so make sure to check that first.

If you have a pension plan with us, you can transfer old pensions into your Standard Life one easily online or on our app. Just give us a few details about your other pension plans and we’ll contact your old provider and get the ball rolling, so you don’t have to do the heavy lifting.

Transfer a pension

2. Get an idea of how much your retirement will cost

Next, work out how much you’ll need to pay for the lifestyle you want in retirement. This will help you narrow down an overall figure to aim for.

A good way to work out how much you might need is to use the Retirement Living Standards as a guide. They give you an idea of the amount of income you might need each year to pay for a minimum, moderate or comfortable lifestyle in retirement. And they base these figures on things like how much you expect to spend on food, transport, holidays and clothing.

You can find all the information you need in How much do I need to retire?

3. Decide when you want to retire

The next step is working out how many years you’ll need to fund. Keep in mind the earliest you can access your pension plan is age 55 (57 from 6 April 2028), and people are living longer these days. So, depending on how early you want to retire, you may need at least a few decades’ worth of income.

The State Pension also won’t kick in until your late 60s. So, if you plan to retire before State Pension age, be prepared to rely solely on your savings for a while.

4. Be realistic

Now you should have a figure to aim for. The next step is working out how you’re going to reach it.

Although it’s good to be ambitious with your goal (you don’t want to end up running out of money in retirement), it’s also important to be realistic. You don’t want to create a goal that’s unachievable or compromises your quality of life now.

If you’ve still got a lot of years ahead of you to save for retirement, you’re in a good position. You’ve got a long time to build up your pension savings, so even starting to regularly pay in a small amount now could make a big difference by the time you retire.

On the other hand, if retirement is just around the corner for you, then you might want to be a little more generous with the amount you pay in now to help you catch up. Take a good look at your overall budget and find out how much you could realistically afford to put towards your retirement to help you reach your goal.

If you want to find out if you’re on track, you can use our pension calculator. It’ll tell you what you’re likely to have in retirement based on what you’re doing now and, importantly, if there’s a difference between what you’re predicted to have and your goal.

5. Factor in the benefits

The good news is, when it comes to saving for the future, your pension plan gives you a helping hand. Pension plans come with a few benefits that make it easier for you to save.

First, if you have a pension through your job, your employer will pay into it as well. And some employers may even match your contributions up to a certain percentage. 

Plus, you get tax relief on your pension contributions, meaning it could cost you less than you think to save into your plan. 

And last but not least, the money in your pension is invested, so it has the potential to grow over time. Just keep in mind the value of investments can go down as well as up, and you could get back less than you paid in.

Time to set your goal

Now you should have all the information you need to get started. 

You might want to change up your pension payments based on your new goal. If you want to make a one-off payment into your plan, you can usually do this online or on our app. You may also be able to change your monthly payments in this way. If your employer set up your plan and you want to change your monthly payments, get in touch with them to find out how this works for you. 

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The information here is based on our understanding in July 2024 and shouldn’t be taken as financial advice.

Standard Life accepts no responsibility for information on external websites. These are provided for general information.

Pension plans are investments, so their value can go down as well as up and may be worth less than was paid in.