How to save for Retirement in the UK: A Simple Guide

It’s the thing most working people dream about: retirement. But are you on track to enjoy your golden years in the fullest way, or are you already worrying about how much will be in your pension pot when it comes to saying goodbye to the world of employment?

Most times, we don’t think about our retirement fund until we get closer to it, but it’s a good idea to think about your retirement savings as much as you would saving for a new car, a holiday or your children’s future.

What kind of retirement do you want?

The answer to this will probably be something like ‘the best retirement possible’ – but that will look different to different people. Some people may be happy with living off of their state pension and various pension pots, while others may want to have lots of savings to dip into to go travelling, purchasing a holiday home or supporting family financially.

So, it’s important to first identify the kind of retirement you want, check how much you’ll receive from your state pension and other pension contributions and then see if you’re happy with how much you’re likely to receive and work out if this is a number you’re happy with. If it isn’t it’s time to start thinking about saving for retirement.

It’s also important to remember that a lot of things in life can happen that are out of your control, so looking into protection such as life insurance and critical illness cover is also a good idea.

How much is state pension?

Check your state pension forecast to understand if you have met the number of qualifying years that you need to receive it. If you are not already receiving a state pension, then you are most likely looking at the New State Pension, which currently works out to £241.30 a week if you will get the full payout.

You can also visit the GOV.uk website to track down any old or lost workplace pensions that you may also have if you don’t have the details of these so you can work out the amount you are likely to get once you hit retirement age.

Why planning ahead matters

Planning your retirement savings can start whenever you want, but the earlier you start, the more money you’ll have in your pot by the time you get there. Everyone’s situation is unique, so the amount you can put away will be different, and that can change throughout your life. Sometimes you may be able to put away more, and other times you may want to save for other events instead, but being aware of your retirement fund is good to always have in the back of your mind. If you need support with working out the best ways to save money for your circumstances, you could opt to look into professional advice to help build the retirement savings plan that suits you best.

Even if it’s years away, you may be considering changing your working situation as you get closer to retirement, such as changing to part-time employment or changing your job later in life, so having a clear savings plan can make the next steps feel easier.

How much will you need to save for retirement?

This question is not a ‘one-size-fits-all’ answer. It truly depends on your aspirations for retirement and what you want to do once you leave employment. It includes housing, travel, hobbies and daily spending and will look different to everyone. If you’re not sure what you want to do once you hit retirement age, you may want to decide what you would be comfortable living on if you did decide you wanted to do more.

2026 Retirement Living Standards per year:

As it stands for 2026, the cost of living in your retirement as stated by MoneyHelper is shown below. It is based on different lifestyles and takes into account things like going on holiday, changing your car or eating out. It doesn’t factor in housing costs as it assumes you would own your home by retirement age and it doesn’t account for tax.

• Minimum lifestyle: £13,900 one person or £22,500 for a couple
• Moderate lifestyle: £32,700 one person or £45,400 for a couple
• Comfortable lifestyle: £45,400 for one person or £62,700 for a couple

The MoneyHelper retirement tools can help you compare your likely income with the life you want and gives you a lot more information around what your current annual salary is compared to what you’d want in retirement and calculators to help you work this out, so it is a really good tool to use to help plan for your retirement.

Plan for both the expected and the unexpected

A retirement budget will cover food, energy, transport and household bills. But not all things can be planned for, and later life can bring costs that are harder to predict, so an emergency fund in an easy to access account may well be a good idea for emergencies. This would be like any emergency fund you may have throughout your whole life, but it’s good to have additional money tucked away that you can use instead of having to use your pension or retirement savings.

Budget for the retirement you want

How to save for retirement is not only about your regular bills and expenses, but can also be about spending more time with family and friends and creating the lifestyle you want, especially in the early active years of retirement.

You may start your retirement with part-time work. Considering your employment options as early as possible can help you decide whether you want more money available at the start of retirement or spread more evenly over the longer term.

Could a Cash ISA help with retirement savings?

A cash ISA for retirement can be a useful home for cash savings because eligible interest is free from UK Income Tax, subject to ISA rules and allowances. There are different types of cash ISAs that you could save with, including standard ISAs like easy access or fixed rate, but also the current government’s Lifetime ISA (LISA), which you can add up to £4,000 a year into and the government will add a 25% bonus to it, so you could save up to £5,000 a year in a LISA. The best savings account for you will differ from person to person, so make sure to read through the conditions of an account before opening anything to ensure it works for you.

Planned Cash ISA limit 2027 changes

From the 6 April 2027, the UK Government plans to reduce the annual Cash ISA limit to £12,000 for everyone under 65, whilst those aged 65 or over are due to keep a £20,000 Cash ISA limit.

Check the latest GOV.UK guidance, as the rules can change.

GOV.UK - ISA reform 2027: https://www.gov.uk/government/publications/fiscal-events-2026-factsheets/isa-reform-2027-anti-circumvention-rules-factsheet

A real-life example: Linda and Dave

Our customers Linda and Dave Greenway, aged 72 and 74, who live in Bedfordshire, each hold £20,000 in Cash ISAs.

The couple said they enjoy earning tax-free interest in an ISA because it provides them with “certainty and peace of mind”, something which is particularly important to them in their current stage of life.

They also mentioned what they find beneficial about having an ISA:

“We like knowing exactly where our money is and that it’s secure, without worrying about changes in value. While we’re hopeful that we won't need to withdraw from it, life can be unpredictable, and it's good to know that the money is accessible should we ever need it. The fact that we can access the funds if an emergency arises is very reassuring, as we prefer to have the flexibility to withdraw our savings if needed.”

Frequently asked Questions

How much should I save for retirement?

There is no single amount for everyone. Compare your likely spending with expected State Pension, workplace or personal pension income, and other sources. Retirement Living Standards and MoneyHelper tools give useful guides, but housing costs and lifestyle will affect what you need.

When should I start saving for retirement?

Starting earlier gives your money more time to grow with compound interest and lets you build savings step by step. If retirement is close, reviewing your savings, likely spending and access needs can still help with how to save for retirement.

Can a Cash ISA be used for retirement savings?

Yes. A Cash ISA can hold cash savings before or during retirement, with eligible interest free from UK Income Tax. It is separate from a pension, so think about what role cash savings should play alongside wider retirement income.

How much cash to keep in retirement?

This depends on your regular spending, other income and unexpected costs. Some people keep a separate accessible savings pot for emergencies and set other money aside for planned spending or longer-term goals.

Next steps

If you’re reviewing your savings as you approach retirement, these pages may help you explore your options. Other savings providers are available.

Kent Reliance Savings accounts

View Cash ISAs

Easy access savings account

Current interest rates

Product availability, rates, tax rules and terms can change. Please read the relevant product summary and terms and conditions before applying. This article gives general information and is not personal financial advice.

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