It may seem that retirement is a lifetime away, but the reality is that it’s never too early to start saving so that you can ensure that you have the retirement that you deserve. If you’ve ever read a pension guide before, you’ll already know that it’s difficult to say exactly how much everyone needs to save as we all have unique circumstances.

That being said, it’s well worth taking the time to experiment with a pension calculator so that you can get a better idea of what you’ll need to do. Before you do that, here are some factors that you’ll need to consider..

What lifestyle are you hoping for in retirement?

Few people are likely to have an exact idea when it comes to what retirement means to them. However, one pension guide has created three categories that describe living standards during retirement:

• Minimum - This lifestyle is about covering all the essentials

• Moderate - The second category gives a greater degree of financial freedom and flexibility

• Comfortable - An even greater degree of financial freedom and the money to enjoy luxuries

So, some of the things that you’ll need to think about with your retirement are the number of holidays you may like, if you intend to have a car and will your home require money for maintenance.

So, how much will I need?

A pension calculator will give you an idea of what you may be able to achieve in terms of a pension, but often people overestimate just what they will need. In reality, when retirement comes the hope is that your outgoings will reduce considerably. The goal is to be mortgage free by this time and this can have a huge impact on your financial health.

Research from Loughborough University has shed light on what people are spending in retirement and the quality of life that they can achieve. Outside of London, people are spending around £30,000 a year. This covers a moderate lifestyle and allows for holidays as well as £100 each month for meals out.

If you’re hoping for a comfortable lifestyle, the same research suggests that you’ll need around £50,000 per year. Again, a pension calculator is worth using so that you can explore just what you’ll have to save to meet your lifestyle needs.

How much do I need to save?

The amount that you will need to save to meet your retirement lifestyle goals will depend on how old you are when you start saving. One incredibly simple way of calculating this is to take your age and half it. This number then represents the percentage of your salary that you need to be saving.

On a basic level, this means:

• A 20-year-old needs to save 10%

• A 30-year-old needs to save 15%

• A 40-year-old needs to save 20%

Of course, this is just a rule of thumb but it still gives you an insight into what you’ll need to put aside.

Another rule of thumb is to have 1x your annual income saved by age 30 and 3x by age 40.

Remember that: The earlier you start saving for retirement, the longer you’ll have to take advantage of the power of compound interest. Start where you can, with a percentage that’s manageable for your budget and increase your contributions when possible. You can also look for previous pensions and potentially consolidate them together.