Why you need a £1 million pension for a comfortable retirement

Research suggests younger savers need to put more into their pension to account for inflation and housing costs ahead of retirement. We explain how to build a £1 million pension pot

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Retirement may not be front-of-mind for most young people but new research suggests they need to build a pension pot worth almost £1.1 million to fund their golden years.

The cost of retirement is rising and the latest figures from the Pensions and Lifetime Savings Association (PLSA) suggest a pension pot worth between £490,000 to £790,000 is needed to purchase an annuity that would cover the costs of a ‘comfortable retirement’ alongside the state pension.

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Assumptions: 5% investment growth net of fees, 2% growth in salary/contributions and inflation
Pension pot achieved with different levels of pension savingPension contributions of 8%Pension contributions of 10%Pension contributions of 12%
£30,000 salary (median salary including part time workers)£395,391£494,271£593,115
£35,000 salary (median full time salary)£460,664£577,333£691,977
£35,000 salary with 2-year career break£436,635£546,107£655,164
Marc Shoffman
Contributing editor

Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.