Why you can stop worrying about your pension

How scared are you about your retirement? If you've been reading any of the money pages in the newspapers over the last few years, the answer is probably very'. That's good news for the financial industry: their livelihood depends on you being scared and staying scared. Why else would you save, and how else would they pull in as much as they do in charges and commissions? But it might be time to ask if perhaps you should stop worrying. Sure, some of us are setting ourselves up for trouble: six out of ten women still aren't contributing to a pension of any kind, for example, and that's clearly not good. But many of us are probably doing OK.

Most advisers say you will need about 80% of your current income when you retire and encourage us to save with that in mind. But that isn't always true. Consider the expenses you have now that you won't have then. You shouldn't have a mortgage and you won't be contributing to your pension any more either. You are also unlikely to be educating and feeding a child, and all the costs associated with your work will also have disappeared: a survey last year showed that it costs the average person around £4,000 to work if you include clothes, commuting, after-work drinks and so on so that's no small cost.

You also won't need the help you used to. As Barron's points out, "fatigued dual-income couples will pay just about anything to get someone else to shop, clean and cook", but retirees don't need to; they can do it themselves. Add all this up, then factor back in the costs of the things that might cost extra money once you are retired (travel, concerts and the like), and you may find that 50% of your current income will be quite enough (particularly if you move down a tax band). "Pay as much attention to curbing your outlays after you stop working as you did in building up your assets when you were still on the job," says Barron's, and you could get away with even less.

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And if you reach retirement age with no money at all? Well, as long as you have somewhere to live, that isn't really a big deal, or so says Pam Arnold in a letter to The Guardian this week. Arnold has "absolutely no savings", so she gets pension credits and her council tax paid for by the state. She gets free dentistry and eye tests, free travel on trains and buses, has her hair cut for a fiver every two months by a barber, buys all her clothes on Ebay or in charity shops (she has the time to browse), spends hours in the library and walking in her local park, swims every day at just over a pound a time, and eats piles of vegetables. "It's a glorious life," says Arnold. "No early rising, stress or worries. I am better off than I have ever been." Her advice? "Offload your money spend it all and set yourself free."