Martin Lewis shares ‘rule of thumb’ for how much you should pay into your pension

Speaking during a retirement-focused episode of his The Martin Lewis Money Show Live on Tuesday evening, the Martin Lewis explained that savers should take the age at which they started paying into a pension and divide it by two.

The figure they get is the percentage of their salary they should aim to contribute throughout their working life.

Mr Lewis said the guidance applies to private and workplace pensions rather than the state pension.

A viewer named Daryl had written in asking whether his current contribution rate was sufficient.

He queried whether putting away 15 per cent of his earnings in his mid-30s would be adequate for retirement without sacrificing his present quality of life.

Mr Lewis responded positively to Daryl’s efforts before outlining the formula.

He said: “Let me give you the rule of thumb that scares the pants off everybody. Take the age when you start putting into your pension – so in your case, we’ll say 30 – and halve it, that’s 15.

“That’s how much of your income you want going in for the rest of your life for a decent retirement.”

Mr Lewis acknowledged that very few people actually meet this target in practice, but emphasised that starting earlier leads to better outcomes in retirement.

The Pensions and Lifetime Savings Association has set out what different retirement lifestyles actually cost in practice.

For those living alone, a basic retirement requires £13,400 annually, while couples need £21,600 per year to cover essential expenses.

A moderate standard of living demands significantly more, with single retirees needing £31,700 and two-person households requiring £43,900 each year.

Those hoping for a comfortable retirement face the highest targets. Individual savers should aim for £43,900 annually, whilst couples would need £60,600 per year to achieve this lifestyle.

These PLSA figures provide useful benchmarks for workers trying to calculate whether their current pension contributions will deliver the retirement they hope for.

Workers should also be aware of upcoming changes to when they can access their retirement savings.

The minimum age for drawing from private or workplace pensions currently stands at 55, but this threshold will increase to 57 from April 2028.

The state pension operates on a different timeline. Men and women can currently claim their state pension at 66, though this age is set to rise to 67 and eventually reach 68 in the coming years.

Mr Lewis also reminded viewers that state pension entitlement depends on National Insurance contributions made during their working lives, which sits separately from any private pension arrangements they may have.