February 18, 2025

How Much Should I Be Saving for Retirement? A Practical Guide

Introduction

Planning your income and expenses for the later years in life

Introduction

Saving for retirement is a topic that it can be particularly difficult to get excited about. It's one of those things that doesn't really feel like it's important, or relevant to you, until you actually need it. By then, of course, it's too late to do anything about it.

Everyone wants a comfortable retirement. We want to be able to know that after a lifetime of hard work, we can continue our current lifestyle.

Although the state pension pot that is on offer from the government contributes a little bit towards this, there's no way around it. We need to have retirement savings too. Which begs the question: How much should I be saving for retirement?

How Do I Know How Much to Save?

There are two ways of choosing how much you can save for retirement. The first is bottom-up. Work out how much of your income you are able to start saving for the short term, medium term and long term.

This means that by a process of elimination, you'll figure out how much you have left over after house savings, car savings, holiday savings etc, and can then forecast this forwards over the course of the rest of your career.

We don't recommend doing this.

The second is to work out what the cost of your current lifestyle is (after temporary costs like mortgage payments if you're expecting to pay this off). Once you've done this, you can work out how much you'll need to start saving and invest in order to provide this annual income in requirement.

This is a good rule for ensuring your financial security in retirement. Of course, it depends on individual circumstances but most people who don't life a lavish lifestyle will probably not be spending a crazy amount of money.

You should also think about things like life expectancy and discretionary spending - you want to make sure that although you're not living lavishly, you can spend enough to enjoy a comfortable retirement lifestyle.

Example

Let's look at a worked example. If you earn £50k now, your UK take home is £38k at the date of writing. If £18k of this goes to your mortgage, which will be paid off by retirement, and £5k to savings, you are currently living on £15k pa.

Let's say you want to continue this level of lifestyle in retirement.

With a paid off property and £15k of lifestyle costs per year, you will want to have a pension pot that supports this level of withdrawal per year. Let's ignore state pension for the time being.

You can either:

  • Build up a personal pension pot that you can withdraw 15k/pa from for the estimated number of years you have left to live, and hope you don't hit 0
  • Build up a personal pension pot that will spit off £15k+ in returns each year without drawing down on the principal. It is generally assumed that a diversified pot of investments can return 4% in perpetuity without going to 0. This is what's known as the safe withdrawal rate. So to set this up you'd need £15,000/4% = £375,000. This is the safe option.

Note that for the purposes of this example we have not taken into account tax relief or inflation, and assumed thereby that your asset growth will outpace future inflation. Which further highlights the need to build a bigger pot than you need.

Types of Pension

So what are the vehicles you might use to build up your retirement savings pot? You have your general investment and savings accounts, which you should hopefully be contributing to already. Beyond that, you will likely have at least one of the following types of pensions:

personal pension, workplace pension, sipp, guaranteed income, more financial security, retirement goals,

Workplace Pension

As the name suggests, a workplace pension is a pension that is set up and provided by your employer. You contribute to pensions savings automatically through your wage, and then employer contributions are added to this.

The combination of these two means that by the time you need your retirement savings, you'll have many years of contributions to dip into. These have several different forms:

Defined Benefit

As the name suggests, a DB pension involves a set amount of benefit in retirement for each year worked. Your pension represents a guaranteed retirement salary in perpetuity.

So each year you work, for example, you might get an extra £1000 in retirement salary. 10 years of working means £10k of retirement income for as long as you live.

These are much less common nowadays as employers realised that people were living longer and it was becoming much more expensive (and risky) to guarantee them long term retirement income until they died.

Defined Contribution

As a result, DC schemes are now much more popular. This means that you contribute a set amount each month.

That is invested in a pre-set pool of investments with a particular mandate and when you retire, you can start drawing down on the large pot of pension savings you have built up in order to live.

Now - in this case, the risk is with the employer rather than the employee - if your pension contributions don't grow as much as you expect them to, no one loses out but you.

It means there is more uncertainty now around required pension contributions and that more care needs to be taken when choosing and managing which pension fund your pension contributions are going towards.

Personal Pension

As a result, it may also be prudent to set up a personal pension. You will be eligible for the same tax relief as you would with an employer pension, but you will be in charge of managing this yourself.

The most common kind is a SIPP: A Self Invested Personal Pension. As the name suggests, you can choose what to invest it in, and you will be able to withdraw a tax free lump sum when you retire, as with a workplace pension.

You can also put property and other cashflowing assets inside a SIPP, making them ideal for some of the more unorthodox financial instruments you may be using to save for retirement. Of course, please do take retirement advice - investing wisely is just as important as how much money you put in.

State Pension

Of course, in addition to the money saved from your annual salary, once you reach retirement age you should, depending on your own circumstances, be eligible for a state pension.

Now, unless you live very frugally this will almost certainly not be enough for retirement in and of itself. However, it provides a useful supplement to the pension plans we've talked about above, and needs to be factored in.

The future of your state pension

Do be aware, however, that depending on how old you are and how much financial freedom you're expecting, the state pension will almost certainly have fallen in real terms by the time you get there!

So as before, you need to be realistic about both your retirement goals and how much you'll need in pension savings by the time you get there. However, it's a useful starting point.

This of course, does not constitute investment advice.

Combining Your Pensions

Now that we've covered off the different types of pension available to you, what's left is to work out what the most effective combination of these will be.

Almost everyone is entitled to a state pension, so you'll be using the calculation we did in Part 1, but forecasting a lower growth rate perhaps to account for inflation and then adding a margin of safety on top.

Of course, the ideal pension pot runs dry on the day that you die, but this is impossible to predict with any degree of accuracy.

Conclusion

So to wrap up: there isn't a set formula or set amount we can tell you to save for a secure retirement. Achieving financial stability most certainly feels more like an art than a science That being said, there are a number of guiding principles that govern the field, some of which we've tried to outline here.

The aim is that you leave with some thinking points that allow you to think about what proportion of your salary you need to save for the future, and highlights the important of starting early.

Employment Status

Of course, the best way to save more is by earning more - which sounds redundant but remember: with a bigger salary, you are able to contribute more of it.

We've also predominantly spoken about those in employment. When you're self employed, the onus is even more on you to be saving responsibly.

Advice

As always with these things, seek professional advice before following instruction on investment strategies that you're not familiar with.

A financial adviser will be able to ask how much income you have available and what lifestyle you need to sustain, and provide you with a realistic retirement savings goal and the correct instruments to reach this.

Managing Your Pensions with Strabo

Many pension providers have taken a little while to adapt to the digital age and provide robust online services.

The more forward-thinking ones provide data feeds that we can access at Strabo and allow you to effectively track your pension values over time.

They feed into our tools like the Scenario Analysis and allow you, with some degree of accuracy, to predict what you might have at retirement in difference scenarios. If not, you always have the option of consolidating your disparate pensions into one pot, something a provider like PensionBee offers.

Finally, you also have the option to manually configure your investments so you can follow along with their performance even if there isn't a direct live feed. Whichever your options, you can sign up to a free trial on Strabo today and check it out for yourself.

Why Use Investing Apps in the UK

The UK has seen a boom in investing apps in recent years, which offer beginner investors an easy to use and accessible option to get into the market.

Investing is now simpler than ever thanks to these applications, which get rid of the need for pricy brokers or complicated procedures. Investing apps like Trading 212, Freetrade, and Revolut make it possible for young and beginner investors to take control of their investments with their user friendly interfaces, built in educational tools and minimal or no costs.

As the need for low cost investing options and financial independence continues to grow, the UK is expected to utilise mobile investing tools even more in 2025. More people in the UK are using apps to manage their money as a result of its adaptability, simplicity of use, and the growing trend towards digital financial solutions and increased awareness of personal financial planning, which makes investing apps an effective tool for beginner investors.

Benefits of Using Investing Apps for Beginners

There are a number of advantages to using investing apps for beginners, particularly for those who are just getting started. Here are a few main benefits:
  • Accessibility - By providing a straightforward, mobile friendly platform that is available at anytime and from any location, investing apps have completely changed how individuals invest. You no longer have to spend hours learning complicated systems or setting up sessions with financial experts. Beginners can begin investing directly from their smartphones with a few taps. Anyone, regardless of their schedule or location, can participate in investing without any obstacles thanks to this immediate access.
  • Low cost - The affordability of investment apps is one of their most notable benefits. The high commissions and administration costs associated with traditional broking services make it challenging for those starting out to invest small amounts of money. On the other hand, a lot of investment apps provide cheap fees or commission free trading, which makes them perfect for beginners. This enables beginners to invest without fear of losing a significant amount of their profits to fees, allowing them to give more money to the market.
  • Adaptability - Traditional investment strategies are not as flexible as investing apps. Beginners can more easily dabble without making a significant upfront payment because many investment platforms enable users to invest in a variety of assets, stocks and shares, exchange traded funds (ETFs), and specialised investment options, allowing beginners in the UK to diversify their investment portfolios right away. Furthermore, everyday investors may manage their investments on their own terms and are not restricted to a 9 to 5 schedule thanks to the option to trade at any time and from any location.
Investment apps are a great place for beginner investors to start because they combine low-cost solutions, user friendliness, and convenience to help gradually increase wealth.

Manage your wealth like never before

Get started

Key Features to Look for in an Investment App for Beginners in the UK

It's crucial to search for features that can features that can facilitate your learning and make investing simple and accessible when selecting an investment app as a beginner. Here are some essential features to look out for:
  • East to use interface
    The design of the app should be simple and intuitive. You will find it easier to comprehend and utilise the platform without feeling overwhelmed if it has a straightforward and uncomplicated layout.
  • Educational Resources
    The best investment apps include educational materials such as FAQs, videos, tutorials, and articles. Beginner investors can use as a guide to understand important investment strategies and make wise choices.
  • Platform fees
    A lot of investment apps charge management fees and trading fees. To protect your investment gains, it's crucial for beginners to select an investment app with little to no costs. The best investment apps waive management fees or provide zero commission trading.
  • Low minimum investment
    For beginners who might not have a large initial investment, apps that let you start investing with small amounts of money are excellent. Also look for apps that sell fractional shares, so you can invest in pricey stocks without having to purchase the entire share.
  • Portfolio diversification tools
    Seek for investment apps that provide a variety of investment options, including mutual funds, index funds, and exchange traded funds (ETFs). Even with little money you can create a diversified portfolio by making a fractional investment in individual stocks.
  • Robo-Advisor Features
    Some investment apps include robo-advisors which automatically manage your investment portfolio according to your goals and risk tolerance. For those whose may not feel comfortable choosing their own investments, this is a fantastic benefit.
  • Security features
    It is important to ensure that the app has strong security features like encryption, two-factor authentication, and safe account recovery methods to protect personal data and information.
  • Current market data
    The best investment apps have real time market data, charts and stock market performance metrics which are essential for beginners who wish to remain informed and make wise judgements.
  • Type of investment accounts
    There are many types of investment accounts available, such as investment accounts for minors, individual retirement accounts and individual taxable accounts. You should choose an investment app that provides you with a range of account options that can help meet your financial objectives.

Further reading

Investing

May 30, 2025

What Happens When You Short a Stock and How Can You Do It?

This is the summary of the blog post on shorting a stock

Read article

Company Updates

May 16, 2022

Why We're Crowdfunding

Read more about our decision to launch a Crowdfund with Seedrs

Read article

Investing

May 2, 2023

What is the Best Crypto Portfolio Tracker

Discover how to use Strabo and other tools to track your crypto portfolio across platforms

Read article

Investing

November 19, 2024

Why is there a Crypto Surge and What Does it Mean for my Portfolio

With crypto prices rising across the board, let's take a look at what this means for your portfolio

Read article

Investing

February 14, 2022

Why a Bear Market Might be a Good Thing for Crypto Investors

A downtrend in crypto markets could prove to be a good thing in the long term. Here's why

Read article

Investing

July 14, 2022

What is Responsible Investing and Why It Matters: ESG Funds

A brief introduction to impact investing for consumers

Read article

Saving

December 3, 2022

Why Energy Prices are Rising: A Brief Explanation

A brief look into the increase in energy prices in the UK

Read article

Saving

June 22, 2022

Why is Petrol so Expensive in the UK in 2022?

It is now more expensive than ever to fill up your car. But why?

Read article

Company Updates

March 5, 2024

What we learnt from launching on Product Hunt for the first time

Launching Strabo on Product Hunt

Read article

Investing

June 14, 2023

Where Should You be Buying Stocks: The UK's Top Brokerage Accounts

Find out which is the best brokerage account to open in the UK this year

Read article

Investing

September 9, 2024

What Metrics Should I be Tracking in my Investment Portfolio

Find out what you should be looking for when tracking your portfolio

Read article

Saving

August 28, 2024

What is the 100k Tax Trap and How Can You Avoid It

A dramatic effective tax increase awaits. Find out what to do when it hits

Read article

Saving

December 3, 2022

What is Inflation, and Why Does it Matter?

Discover how rising prices come about and what they mean for you

Read article

Saving

June 29, 2024

Prepare Yourself for Unexpected Expenses: How to Plan for the Future

Get ahead of any large upcoming costs before they affect you

Read article

Investing

August 17, 2022

Modern Portfolio Theory: Real-World Applications

Discover how MPT can be applied to your investments

Read article

Saving

February 21, 2025

Top 10 Best Apps for Saving Money UK: Boost Your Savings Effortlessly

Find out which ones you should download today

Read article

Guides

October 15, 2024

What is a Debt Management Plan?

Gain control of your debt today

Read article

Saving

January 31, 2022

The Top 5 Bank Accounts for Digital Nomads

Which should you use when moving abroad

Read article

Guides

March 2, 2024

The Top 5 Financial Planning Tools Used by Advisors

Which software can help you improve your clients' experience

Read article

Guides

May 11, 2023

The Property Investment Guide

Learn about getting started with property investing with Strabo

Read article

Investing

June 21, 2024

The Top 10 Financial Trends to Watch in 2024

Here's what you should be paying attention to for the upcoming year

Read article

Financial Independence

December 8, 2022

The Pros and Cons of an Increased Workplace Pension Contribution

Should you increase your pension contributions or invest elsewhere?

Read article

Investing

September 26, 2024

The Future of Finance: 10 Key Fintech Trends Shaping 2024 and 2025

Here's what to pay attention to in fintech in the coming years

Read article

Guides

March 14, 2023

The Financial Planning Guide

Your detailed guide to personal financial planning

Read article

Saving

April 7, 2023

The ISA: Part 1 - What is it, and How Should I Be Using It?

What are the different types of ISA and how can you use them as an effective tool?

Read article

Investing

December 15, 2022

Fear and Greed Index: What It Is and Its Market Impact

Measuring how much fear and greed is affecting market prices

Read article

Saving

December 3, 2022

Best Savings Account for International Students Abroad

A resource to compare savings accounts for UK students abroad

Read article

Saving

June 14, 2024

The Cost of Marriage: Effects of a Wedding on Your Financial Life

Calculate how much your wedding might cost you

Read article

Investing

October 28, 2022

Portfolio Risk Analysis: Measuring Investment Vulnerability

How to measure and react to the risk in your investment portfolio

Read article

Guides

April 3, 2023

The Capital Gains Tax Guide for the UK

A simple guide to capital gains tax in the United Kingdom

Read article

Saving

May 2, 2022

The Cheapest Digital Nomad Locations: Where to Go on a Budget

Tips for moving abroad from the Strabo team

Read article

Investing

February 22, 2024

The Best Investment Options in UAE

Tips for investing in the UAE from the Strabo team

Read article

Saving

April 4, 2022

Create Budgets: Best Finance Apps in Australia for You

Tips for saving money if you're in Australia

Read article

Investing

August 2, 2024

The Best Digital Asset Management Software for the United Kingdom

Today we're breaking down the best software to manage your assets

Read article

Saving

December 16, 2022

The Best Finance Apps for Couples: Manage Your Money Together

Try out Strabo or one of the other apps designed for couples to manage their finances

Read article

Investing

March 7, 2022

The Best Investing App in Europe: Find Out Which One is Right for You

Look no further - a breakdown of the best investing apps for Europeans

Read article

Investing

April 18, 2022

The Best Bank Account for UK Landlords

A brief exploration of what makes a good bank account if you have rental property

Read article

Investing

February 14, 2025

What is Mean Reversion, and How Can Investors Use It?

Taking a deeper look at one of the most important statistical concepts in investing

Read article

Saving

May 9, 2022

Best Bank Account for Expats & Digital Nomads: Bank Stack

How best to manage your money strategically across countries

Read article

Company Updates

January 14, 2024

Strabo is Live! 5 Lessons learned from a Public Software Launch

Key learnings from a public SaaS product launch

Read article

Saving

December 3, 2022

The 2022 UK Budget Announcement: Everything You Need to Know

Key headlines from this mornings red suitcase

Read article

Investing

April 4, 2023

Startup Investing Part 2: Venture Capital, EIS and VCT

A follow up on investing in early stage companies

Read article

Saving

June 27, 2024

Preparing Your Savings for a Baby: How Much Does it Cost?

Helping you make one of the most important personal decisions in your life

Read article

Financial Independence

June 30, 2022

Should I Put All My Pensions Together?

Helping you decide if separating or combining your pensions is the right choice for you

Read article

Investing

August 5, 2022

Should You Invest in Gold and Silver?

They're huge asset classes, but are they worth your money?

Read article

Investing

July 11, 2024

Smart Strategies for Investing While Living Abroad: An Extensive Guide

An expat's help guide for investing abroad

Read article

Investing

November 30, 2022

Rental Property: The Best Buy to Let Mortgages for First Time Buyers

How to finance your first rental property

Read article

Company Updates

June 6, 2022

Risk Appetite vs Risk Tolerance: How They Should Impact Your Portfolio

Understanding risk: one of the most important aspects of personal investing

Read article

Saving

July 4, 2022

Paying Down High-Interest Debt: Avalanche vs. Snowball

Are you in debt? If so, this repayment strategy blog is vital for you

Read article

Guides

October 1, 2024

Maximize Your ISA Allowance: Top Tips for UK Investors 2024/25

Make the most of your £20k allowance this year

Read article

Guides

December 3, 2024

Master Wealth in 2024: Smarter Strategies for Your Finances

A categorical summary of top strategies for the year

Read article

Saving

June 23, 2023

Managing Debt: Smart Strategies for Borrowing and Repayment

Get a hold over your debt and how best to complete repayment

Read article

Investing

December 4, 2024

Is Dumping $230K into the S&P 500 All at Once a Bad Idea?

Learning how to invest a lump sum

Read article

Financial Independence

July 29, 2024

Making the Most of Your Pension Pot: Tips for New Savers

Get a grip on your pension with Team Strabo

Read article

Guides

July 10, 2024

Making the Most of a Gift or Bonus: A Practical Guide

Learn the responsible way to manage a lump sum

Read article

Saving

March 14, 2022

Is there a Multi Currency Personal Finance App?

Discover cross-border investing with a multi currency finance app

Read article

Financial Independence

December 3, 2022

Is Passive Income Possible Through Dividend Investing

Capture company earnings with strategic dividend investing

Read article

Investing

August 22, 2024

Investment Strategies in the UK: What You Need to Know

Explore practical strategies to become the best investor you can

Read article

Investing

April 24, 2023

Investing in US Stocks from the UK: A Finance Guide

Capturing upside from the US stock market

Read article

Investing

December 3, 2022

Investing Strategies for Market Turmoil

Navigate the inevitable market disruption with a proper strategy

Read article

Saving

June 1, 2022

I Have No Savings at 30: What do I do?

Don't panic - let's look at your financial situation

Read article

Investing

June 10, 2022

Investing During a Bear Market: Tips to Protect Your Portfolio

Navigate market turmoil with a robust investing strategy

Read article

Investing

June 27, 2022

Investing in Hated Sectors: Do Sin Stocks Outperform Others?

Sin stocks have the potential to be volatile and risky. But do they outperform the market?

Read article

Investing

October 28, 2023

How to Use Chat GPT as Your Personal Finance Assistant

Leverage AI to improve your investing strategy

Read article

Financial Independence

January 26, 2024

How to Use a Side Hustle to Boost Your Income

Discover how a side hustle can supplement your income and net worth

Read article

Saving

October 18, 2024

How to Prepare for the 2024 Budget

Discover the highlights from the latest red suitcase

Read article

Investing

December 3, 2022

Choosing the Best Stocks for Long-Term Investment: A Guide

How to build a portfolio that endures for the long term

Read article

Investing

September 18, 2024

How to Buy Shares Online in the UK: A Step-by-Step Guide

Get started investing in shares today

Read article

Saving

June 19, 2024

How Much to Spend on Holidays Per Year

Budget for this year's holiday now

Read article

Saving

August 22, 2022

How to Budget and Invest on an Irregular Income

Smooth your freelancer income

Read article

Saving

May 6, 2025

How to budget for a Holiday

Plan your expenses for this year's holiday today

Read article

Financial Independence

February 18, 2025

How Much Should I Be Saving for Retirement? A Practical Guide

Planning your income and expenses for the later years in life

Read article

Financial Independence

February 8, 2023

Fire Movement UK: The Financial Independence, Retire Early Movement

Discover FIRE with Strabo

Read article

Saving

January 20, 2023

How Many Bank Accounts Should You Have in the UK?

Set up your bank stack with the help of Team Strabo

Read article

Company Updates

June 7, 2022

How Crowdfunding Works for Startups

Discover fundraising tips from Team Strabo

Read article

Saving

December 3, 2022

How Best to Navigate the UK Tax Code: Your Guide for Consumers

Paying tax in the UK can be confusing. Here's our short guide

Read article

Saving

January 21, 2024

Clever Ways to Save Money When You Get A Pay Rise

Make the most of that extra cash each month

Read article

Investing

September 7, 2022

Futures and Options: What are They, and How to Trade Them

Learn about some of the more esoteric ways to invest with Strabo

Read article

Guides

July 16, 2024

Useful Expat Tax Advice: Maximise Savings & Avoid Penalties

Make the most of overseas tax regimes today

Read article

Saving

November 1, 2024

Do You Need an AI Financial Assistant?

Using modern AI to augment your personal finance management

Read article

Investing

August 11, 2022

Electric Vehicle Stocks are on the Rise: Should You Invest?

Discover investing potential in the financial markets' latest trend

Read article

Financial Independence

November 29, 2022

Do You Need a SIPP & What are the Withdrawal Rules?

Using a Self Invested Personal Pension to accelerate retirement savings

Read article

Financial Independence

June 20, 2022

Do You Need a Global Wealth Manager

A brief guide to using a cross-border financial adviser

Read article

Investing

September 6, 2024

Cryptocurrency vs. Stocks: what’s the difference?

Learning the fundamental difference between two of the most important asset classes

Read article

Financial Independence

July 24, 2024

Detailed Breakdown of Pension Schemes in the UK

Learn about the different types of UK retirement accounts

Read article

Investing

August 16, 2024

Choosing the Top Real Estate Management Software in the UK

Manage your rental properties more effectively with specialist software

Read article

Investing

August 13, 2024

Cheapest Way to Buy Shares in the UK: A Practical Guide

Learn how to get started investing in stocks in the United Kingdom

Read article

Saving

December 3, 2022

Chancellor's 2022 UK Budget Announcement: The Update

Discover updates from this year's red suitcase

Read article

Saving

October 13, 2024

Cash Flow Planning: How to Draw From Your Portfolio

Withdrawing money from your portfolio in the most effective way

Read article

Investing

March 1, 2023

Calculate Your Investment Portfolio Diversification With Strabo

Use our handy tool to figure out how diverse your portfolio is

Read article

Guides

August 8, 2024

Budget of Paris Olympics 2024: Costs, Funding, and Economic Impact

Learn about some of the key financials behind this year's biggest sporting event

Read article

Investing

February 27, 2025

Best Investing Apps for Beginners UK: Top Choices to Start Your Investment Journey in 2025

Learn how best to get started with your first investment with Team Strabo

Read article

Guides

November 7, 2024

Balancing Holiday Expenses with Long-Term Goals in Your 30s

How best to split your spending between work and play

Read article

Guides

October 11, 2024

11 Essential Financial Calculators to Simplify Your Finances

Start using Team Strabo's favourite tools today

Read article

Investing

August 2, 2022

Portfolio Construction Begins with Asset Allocation: A Guide

Learn how to allocate your funds effectively between assets

Read article

Investing

November 12, 2024

Achieve Your Financial Goals in Your 30s with Strabo AI

Leverage our AI financial assistant to get the most out of your portfolio

Read article

Investing

July 8, 2022

10 Tips for Contracts and Tenants for Your First Rental

Avoiding the most common pitfalls with your first investment property

Read article

Financial Indep

September 12, 2024

10 Effective Tips to Get Your Finances on Track

Get the basics right with Team Strabo

Read article