Caroline Dabney-Rourke envisions her retirement filled with yearly international vacations and several UK getaways.

However, at 59, the café owner’s minimal pension—expected to yield approximately £350 annually at age 67—falls short of supporting her desired lifestyle, even when combined with the state pension. She may need to sell her rental property to clear its £250,000 interest-only mortgage.

Fiona Johnston, 41, dreams of foreign holidays, dining out, and maintaining a gym membership post-retirement. The hairdressing business owner intends to retire before her state pension age of 68 but acknowledges her £70,000 pension needs boosting.

They are among millions who might need to adjust their expectations to achieve their retirement dreams.

According to a Scottish Widows survey of over 5,100 people, 38% of workers lack sufficient savings for even a “minimum lifestyle” in retirement, an increase from 35% last year.

Wondering if you’re on track for your ideal retirement? Whether you’re weeks, years, or decades away from collecting your pension, monitoring your retirement savings is crucial for future planning.

Your desired retirement lifestyle determines how much you need to save. The Pensions and Lifetime Savings Association (PLSA) provides guidelines for minimum, moderate, and comfortable retirement lifestyles.

Owning your home mortgage-free, a minimum lifestyle requires an annual income of £14,400 (pre-tax £14,857), which includes £50 weekly for groceries, £25 monthly on eating out, and one UK holiday annually. Couples need £22,400 (£23,000).

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A moderate lifestyle requires £31,300 annually (£35,982 pre-tax) for £55 weekly groceries, £30 on dining out, a two-week three-star Mediterranean holiday, and a long weekend in the UK. Couples need £43,100 annually.

For a comfortable lifestyle—£70 weekly for food, £40 for dining out, a four-star Mediterranean holiday, and three UK weekends—a single person needs £43,000 annually (£50,887 pre-tax); couples need £59,000.

Evelyn Partners calculated the necessary savings for desired pre-tax retirement income based on age. Assuming full new state pension (£11,502), and using all private pension funds for an annuity, the private pension is projected to grow 4% annually post-charges.

Today’s tax rates and thresholds were used for simplicity, ignoring future state pension and PLSA changes.

For a minimum retirement lifestyle, savings generating £2,900 annually (£3,356 pre-tax) plus state pension require a retirement pot of £67,749. If you start saving at 20, you’d need £40.83 monthly contributions, inclusive of tax relief and employer contributions.

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Starting later requires higher contributions: at 30, £66 monthly; at 40, £114; at 50, £229; and at 60, £688.

A more luxurious retirement requires significantly more. For a moderate lifestyle, a £494,000 pot means £298 monthly contributions starting at 20, and escalates to £5,008 if starting at 60.

For a comfortable lifestyle, a £794,000 pot necessitates £479 monthly at 20, increasing to £8,058 at 60.

Craig Rickman from Interactive Investor said, “Saving enough for a desired retirement isn’t easy. Delaying savings by ten years could double the monthly contributions needed.”

Johnston began saving at 30, initially £85 monthly, now £400. Her pot is worth £70,000, potentially growing to £436,000 by state pension age 68, yielding £22,106 annually from an annuity plus £11,502 state pension, totaling £33,608, or £29,400 after tax. To afford a moderate lifestyle, she needs to save £480 monthly; for comfort, £725.

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Johnston acknowledges, “I’ll need to increase contributions for my desired retirement but the cost of living crisis makes increasing savings challenging.”

Dabney-Rourke relies on her buy-to-let property, generating £29,400 annually pre-tax, plus state and Surrey council pensions, totaling £41,152 pre-tax or £23,650 after her £250,000 interest-only mortgage.

Despite her plans to sell the rental property, which is valued at £800,000, she aims to clear the mortgage and fund her retirement if necessary.

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“By pension age, I’ll decide on selling and using proceeds for retirement. Working past state pension age would be disappointing, preventing me from enjoying hobbies while healthy.”

It’s vital to realistically assess retirement expenses and consider free time or bucket-list items.

Gary Smith from Evelyn said: “Aim for realistic monthly expenditure. Spending may start high in early retirement and ease later, with possible increases at life’s end for care costs.”

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Natacha Hansen, 26, has contributed to a pension since 19. Her father set up a pension at age 3, worth £27,000 at 18. Now, she saves £4,000 annually in her SIPP with Interactive Investor, totaling £79,000.

Despite irregular teaching and gig income, she strives to save monthly. If she retains her current saving rate, Hansen projects an £880,000 pot by 68.

“My dad taught me financial discipline. It’s hard to picture retirement, but I hope for comfortable living,” said Hansen, residing in Greenwich, south London.