How much you should already have saved for retirement – you’re probably about 60 per cent short

Generation X needs to have already saved £187,400 by today to retire on £19,000 a year

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Retirement saving. It’s not sexy or fun and it won’t increase your vital stats on social media.

But if you want to be sure of living out your twilight years without constantly worrying about money, it’s a must.

The problem is that most of us haven’t got a clue how much we need or how we’re going to do it.

The latest terrifying figures seen exclusively by The Independent show, for example, that Generation X needs to have already saved £187,400 by today to retire on an income of £19,000 a year.

Nationwide, that would give them just enough cash for general living costs, one long-haul holiday and, if they’re lucky, a new car every five years unless they lived in London, where it wouldn’t even cover the basics.

In reality these 43- to 54-year-olds have only got around £70,400.

Millennials in their twenties and thirties, meanwhile, should have £73,500 slotted away if they want to achieve a stress-free old age.

Even 24-year-olds with an average of just a year in the workplace would already need to have saved £7,348, regardless of what else they’re paying off or saving for, according to financial adviser Salisbury House Wealth.

And by the time we hit 65, having ideally saved that £7,348 every single year over a 42-year career, we should have more than £308,000 to fund that £19,000 income.

In total, assuming inflation of 2.5 per cent, the adviser suggests we need a savings pot worth £323,000.

How do your savings shape up?

Check your age against the amount you need to have saved by now to see if you’re on track.

Age	Annual income needed in retirement	Amount needed in retirement (with retirement age of 67 and life expectancy of 82)	Amount needed in retirement with an assumed long term inflation rate of 2.5%	Amount to be saved each year (assuming start at 23 and finish at 67)	Number of years saving so far	Amount needed by 2019
24	£19,000	£266,000	£323,300	£7,348	1	£7,348
25	£19,000	£266,000	£323,300	£7,348	2	£14,695
26	£19,000	£266,000	£323,300	£7,348	3	£22,043
27	£19,000	£266,000	£323,300	£7,348	4	£29,391
28	£19,000	£266,000	£323,300	£7,348	5	£36,739
29	£19,000	£266,000	£323,300	£7,348	6	£44,086
30	£19,000	£266,000	£323,300	£7,348	7	£51,434
31	£19,000	£266,000	£323,300	£7,348	8	£58,782
32	£19,000	£266,000	£323,300	£7,348	9	£66,129
33	£19,000	£266,000	£323,300	£7,348	10	£73,477
34	£19,000	£266,000	£323,300	£7,348	11	£80,825
35	£19,000	£266,000	£323,300	£7,348	12	£88,173
36	£19,000	£266,000	£323,300	£7,348	13	£95,520
37	£19,000	£266,000	£323,300	£7,348	14	£102,868
38	£19,000	£266,000	£323,300	£7,348	15	£110,216
39	£19,000	£266,000	£323,300	£7,348	16	£117,564
40	£19,000	£266,000	£323,300	£7,348	17	£124,911
41	£19,000	£266,000	£323,300	£7,348	18	£132,259
42	£19,000	£266,000	£323,300	£7,348	19	£139,607
43	£19,000	£266,000	£323,300	£7,348	20	£146,950
44	£19,000	£266,000	£323,300	£7,348	21	£154,300
45	£19,000	£266,000	£323,300	£7,348	22	£161,650
46	£19,000	£266,000	£323,300	£7,348	23	£168,990
47	£19,000	£266,000	£323,300	£7,348	24	£176,350
48	£19,000	£266,000	£323,300	£7,348	25	£183,690
49	£19,000	£266,000	£323,300	£7,348	26	£191,040
50	£19,000	£266,000	£323,300	£7,348	27	£198,390
51	£19,000	£266,000	£323,300	£7,348	28	£205,740
52	£19,000	£266,000	£323,300	£7,348	29	£213,080
53	£19,000	£266,000	£323,300	£7,348	30	£220,430
54	£19,000	£266,000	£323,300	£7,348	31	£227,780
55	£19,000	£266,000	£323,300	£7,348	32	£235,130
56	£19,000	£266,000	£323,300	£7,348	33	£242,480
57	£19,000	£266,000	£323,300	£7,348	34	£249,830
58	£19,000	£266,000	£323,300	£7,348	35	£257,180
59	£19,000	£266,000	£323,300	£7,348	36	£264,530
60	£19,000	£266,000	£323,300	£7,348	37	£271,880
61	£19,000	£266,000	£323,300	£7,348	38	£279,230
62	£19,000	£266,000	£323,300	£7,348	39	£286,580
63	£19,000	£266,000	£323,300	£7,348	40	£293,930
64	£19,000	£266,000	£323,300	£7,348	41	£301,280
65	£19,000	£266,000	£323,300	£7,348	42	£308,630

Source: Salisbury House Wealth

The truth is that any contribution will help, especially as the state pension age continues to increase.

Tim Holmes, managing director at Salisbury House Wealth, says: “There is a big gap between what individuals need to have saved into their pension pot by this point and what they actually have.”

“When you start saving is just as important as how much you save each year.”

“In order to have saved enough by your mid-fifties, you need to start saving early. Incrementally building a private pension pot and investing with a sensible long term outlook will take you a long way to having the buffer you need when you finally reach retirement age.”

“The question that needs to be asked is whether you want to just survive in retirement or actually enjoy it.”

Trying to anticipate the answer, the government launched the ground-breaking workplace pension which this month has automatically enrolled 10 million savers.

“Getting 10 million more people to save for their retirement is an astonishing success,” says Tom McPhail, head of policy at Hargreaves Lansdown.

“Everyone who is now a member of a workplace pension is taking steps towards a more prosperous and better-funded retirement. The fact so few have opted out so far is testament to the effectiveness of this nudge; most people knew they needed to do this and are just glad someone has helped them make it happen.”

But if, on average, we’re still under-saving so significantly there are clearly still significant problems.

The fundamental issue is one of engagement. We don’t really pay attention until we start to build up an amount that means something.

Studies show that once we’ve saved £5,000 the money suddenly becomes a little more interesting and we start becoming more interested in where the money is invested, how it performs and how to make it bigger, including saving more each month.

And we’ll need to. Despite contribution rates set to rise again in April to at least 3 per cent for employers and 5 per cent for employees, it still won’t be enough for most people.

“The pensions industry keeps demanding the government increase the statutory minimum contributions but they’re barking up the wrong tree,” argues McPhail.

“The answer to getting contribution rates up to an adequate, or even a good level lies in engaging members to make individual choices about how much they should be saving. It also lies in encouraging them to take control of their investment choices so they can make the most of the money they do save. For many pension scheme members, the default fund is not the best answer.”

So those enrolled in the workplace pension can’t afford to sit back on their laurels just yet.

But there are still another 9 million working adults who aren’t enrolled in the workplace pension, usually because they’re self-employed, too young (the qualifying age is currently 22 though it is likely to reduce to 18 in the mid-2020s), or they don’t earn enough from a single employment to be eligible. The lower income threshold is currently £10,000 though again, there are vague promises to scrap it completely at some point in the next few years.

Meanwhile there are millions of small “dormant” pension pots, caused when someone leaves a job and their retirement savings are left behind in their former employer’s pension scheme.

Multiplied out over people’s working lives and exacerbated by auto-enrolment, there is a risk of billions of pounds going to waste.

“Perhaps the biggest and most important challenge is to turn disengaged pension scheme members who have been auto-enrolled into active investors who can make sensible choices about what to do with their money,” adds McPhail.