You may not be aware of just how much you need to save for retirement – Which? claims you could need as much as £45,000 each year to support a luxurious lifestyle after you stop working.  

But of course, the exact amount you’ll need will ultimately depend on your personal situation, and what you want to achieve in later life.

That said, to ensure you’re saving enough, it’s vital that you keep track of the value of all your pension pots, no matter what your goals for the future are. 

Despite the importance of this, many UK adults don’t know exactly how much they’ve saved. Indeed, a survey reported by MoneyAge shows that 75% of UK adults don’t know the value of their pension pots, rising to 79% among 55- to 64 year-olds.

Not only can this hamper your progress towards your savings goals, but you may also find yourself with a shortfall when you eventually retire. So, continue reading to discover why it’s vital you keep track of the value of your pensions, and some ways you can find out how much you’ve saved. 

Knowing the value of your pension can help you achieve your saving goals

The first, and perhaps most beneficial, reason for keeping track of the value of your pension is simply to ensure you’ve saved enough for the retirement you want. If you have a shortfall, you may not be able to support your desired lifestyle after you stop working. 

Even if you receive the full amount of the new State Pension – £203.85 a week in 2023/24 – this may be enough to cover any basic expenses you have. But in all likelihood, it wouldn’t be enough for you to meet your other life goals, such as expensive holidays or buying a luxury car. 

To show how much you’d realistically need during retirement, Which? conducted a survey of retired individuals to look at what later life has historically cost.

The magazine’s findings state that you’ll generally need somewhere between half and two-thirds of the income you had while working (after tax) to maintain your lifestyle. This is because you may have paid off your mortgage and are no longer bringing up children. 

The Which? survey revealed that two-person households spent around £2,340 a month to live “comfortably” – roughly £28,000 a year. This covers all basic expenditure, as well as some luxuries such as European holidays, the occasional meal out, and hobbies. 

Meanwhile, for a two-person household to live “luxuriously” during retirement, Which? found that retirees needed around £45,000 a year. This included long-haul trips and a new car every five years. The chart below illustrates the different retirement income targets previously discussed:

Source: Which?

It’s important to note that the above figures are not personalised, and so do not necessarily indicate how much you would need for your desired retirement in your specific circumstances.

To find out how much you would personally need, you should think carefully about what you want to do when you stop working and the lifestyle you want to live.

Then, you can figure out roughly how much your dream lifestyle would cost, establish how much you’ve saved now, and alter your saving targets to reflect this. 

However, if you don’t keep track of the value of your pensions now, you likely won’t know whether you need to save more now to meet your targets. And, the longer you leave it, the less likely it is that you’ll have the time to make up for any shortfall. 

When you know exactly how much you have saved, you can see whether you’re on track to build the fund needed for your desired lifestyle. After all, you need to save a considerable sum of money, and if you don’t keep track of the value of your pensions, you may discover you haven’t saved enough when you eventually retire.

Also, it can be challenging to keep track of the total value of your retirement fund if you have several different pots. Zippia reports that the average person changes jobs 12 times in their working life, potentially meaning 12 different employer pension schemes. 

Some providers may merge over the years, change their name, or even sell tranches of their business to scheme administration specialists, making this even more complex. 

How to establish the value of your pension pots

Whether you have a personal, workplace, or self-employed pension, you can check your total contributions and the overall value of your pots by reviewing your pension statements. 

Your provider will typically send you one each year, showing you a complete breakdown of the money held in your pots, and the sum you’ve contributed over the years. Or, you could log in to your pension provider’s online portal if they have one. Just make sure you do this for each pension pot you have.

These days, most workplace and personal pensions are “defined contribution” (DC), where your total contributions and the subsequent growth of that money dictates the full value of your pot.

If you have a DC pension, your pension provider should give you a projection of your fund’s value, typically factoring in investment growth and inflation-linked growth in your earnings.    

On top of this, it may also be worth figuring out if you’ve made enough National Insurance contributions (NICs) to qualify for the full State Pension. As mentioned, this likely won’t be enough to support your lifestyle on its own, but it could make a difference when totalled in alongside your other retirement savings. 

You can check your State Pension forecast using the government website. 

Above all, speaking with a financial adviser is perhaps the most sensible way to keep on top of the value of your pension pots. Together, you can establish your desired lifestyle during retirement, then closely examine how much you’ve already contributed to your pensions. 

From here, your planner can help you to organise your wealth with your goals in mind, and keep a close eye on your money so that you stay on track towards your targets. 

Get in touch

It can often be tricky to keep up with the value of your pensions when you’re dealing with all that life throws your way. 

Please email info@holbornfinancial.com or call 020 8946 8186 to find out how we can help you keep track of and manage your pensions.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.