Have you seen the light on sunset savings?

Only the lucky few can rest on their pension pots. Most of us need to put cash by - now

Just how much is enough?

The consumer group Which? last month estimated that the average Briton would be happy to retire on £312 a week.

But make no mistake, unless you have the good fortune to be on decent wages, in a final salary pension and close to the end of your working life, you're likely to find it hard to generate this "dream" retirement income.

For most of us, our main source of money in retirement will come from an annuity - or annual income for life - bought from a life insurance company and built up through an employer's "money purchase" pension scheme.

To reach the magical weekly £312, and after allowing for today's full basic state pension of £84.25 a week for a single person (rising with inflation), Which? has estimated that workers will need to have a further £12,000 a year after tax in retirement income.

A woman wanting to retire at 65 with a pension this big would have to put aside £350 a month if starting to save at age 30, and £630 at age 40. Interest rates on annuities are currently low, and a monthly income of £312 would require a total pension savings pot of roughly £340,000, including employer's contributions and tax relief.

The standard advice on pensions - start saving as young as you can - has never rung truer, says Patrick Connolly of wealth manager JS&P Towry Law: "It's the only rule of thumb. It's so easy to delay, but the longer the delay, the harder it becomes to catch up."

While many people cannot afford to start a pension early in their working life, apathy can be partly to blame, too. Fail to join a pension scheme where your employer pays contributions on your behalf, and you're in effect denying yourself a part of your salary - and making yourself poorer in later life.

Figures from the independent financial adviser (IFA) Hargreaves Lansdown show that a 30-year-old man earning £30,000 who saves 10 per cent of his salary can look forward to a pension of £8,000 a year at 65.

"However, if he delays starting his pension by five years, then his projected income drops to £5,480 - a reduction of nearly one-third," warns Tom McPhail, head of pensions research.

As final salary schemes disappear - barely 10,000 exist today, says the National Association of Pension Funds, and only a third are open to new members - it's becoming difficult for the individual saver to know how much to put aside.

Many Independent on Sunday Money readers have written to ask whether they should adopt the often-quoted formula that an individual's pension contribution should be equal to half their age. Justin Modray of IFA Bestinvest calls it a "good" guide when starting a pension, but adds that everyone's personal circumstances will differ.

"Don't forget that you'll probably have paid off your mortgage debts and your children may have left home by the time you retire, so factor this into your estimates," he says.

For older workers, Steve Bee of insurer Scottish Life says: "A good rule of thumb is that a 'pension pound' will cost you about 20 quid if you're in your mid-60s."

There are now a number of pension calculators on the internet to help you work out where you are today - and how much you need to get on track.

The software is not difficult to use and the exercise shouldn't take you too long - the only rule is to be honest about what you're earning and your savings.

If you've no idea where you stand with your pension, it's much better to get an idea now than to put it off any longer. First, says Mr Modray, for every occupational and personal pension you have, write to the scheme administrator and ask for a projected pension payout income at the age you are due to retire.

They should normally reply within a few weeks and don't be surprised if the results shock you; just be prepared to consider upping your contributions and take a good look at the types of pension fund your money is invested in.

For example, you may find your contributions to your company's money purchase pension scheme are in the "default" fund. This usually aims for cautious growth, so if you're in your 20s, 30s or 40s - and plan to stick with the firm for a number of years - it's probably worth your while picking a higher-risk fund. Your money should then be invested long enough to ride out stock market ups and downs and so secure higher gains.

If you're close to retirement, don't just accept your own life insurer's annuity rates. Returns vary enormously, often by as much as £70 a month, so shop around for the best ones.

For pension calculators, try www.pensioncalculator.org.uk; h-l.co.uk; fsa.gov.uk; bestinvest.co.uk/pensions/index.htm; pru.co.uk/retire/guides_tools/rstools/

For a state pension forecast from the Government, call 0845 300 0168

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