Saga Money article - How to meet the retirement living standards

Bridging the gap between State Pension and retirement income targets means getting pensions, ISAs and budgeting working together—especially in your 50s and 60s.

Start with a clear budget and, ideally, cashflow modelling with a financial adviser to understand current spending, future income needs, and identify where expenditure can be reduced so more can be invested each month. This often has as much impact as investment returns.

Maximise workplace pensions, employer matching and salary sacrifice, and use carry forward where available. Couples should fully utilise both pension allowances and tax relief across the household.
Build ISAs as a flexible, tax-free bridge to cover income before State Pension age, and consolidate old pensions to reduce costs and improve control. SIPPs can help align investments with income needs and risk.

Finally, check National Insurance records to maximise State Pension entitlement and ensure no gaps are left unaddressed.

The new 'Retirement Living Standards' are a wake-up call, not a reason to panic. In your 50s and 60s the biggest wins are often boring but most influential- check old pensions, raise contributions when pay rises, and make sure you are getting every penny of employer matching in a workplace scheme. SIPP savers should review charges, investment risk and unused allowances, rather than simply hoping markets do the heavy work. Anyone returning after a career break should rebuild contributions gradually and check their State Pension record. The self-employed need to treat pension saving like a bill, not a bonus. Automate it monthly if possible. The key is not one heroic lump sum, but closing the gap year by year.

The cost of a comfortable retirement is rising faster than many people's pension pots.

For anyone in a workplace pension, it is worth checking whether the employer matches contributions above the legal minimum. Failing to take full advantage can mean leaving money on the table.

Those with a SIPP should review their investment mix. If the pot has begun de-risking but retirement is still a decade away, valuable growth may be given up too early.

Anyone who has taken a career break should check their State Pension forecast. NI gaps can sometimes be worth filling if it improves future entitlement.

The self employed have no employer saving for them. A SIPP with a standing order, even with variable contributions, can be a good starting point.

Retirement outcomes are usually improved less by a miracle investment than by a series of sensible decisions made early enough for compounding to do its work.

The gap between the average UK salary (around £35,000) and the £45,400 needed for a comfortable retirement is a useful frame for readers who find the pot figures daunting. People also need to consider how much of the heavy lifting the State Pension (£12,548 this year) does. The real gap to close for a single person is around £32,000, not £45,400.
If you have had a career break, check your State Pension record for NI gaps via the government gateway. Buying voluntary credits is often the cheapest route to guaranteed extra income in retirement.
For workplace scheme members, the first question is whether your employer will match higher contributions. Many will. It is also worth checking your default fund. A lot of schemes de-risk automatically in your mid-50s, which can cost you growth at exactly the wrong moment.

In your 50s and 60s, the pension conversation has to move from “I hope it will be enough” to “what exactly am I on track for?” The first step is to get every pension statement together, check your state pension forecast and understand the income gap.

For workplace pensions, increase contributions where affordable, especially if the employer will match more. That is often free money people miss. For SIPPs, review charges, investment risk and whether the pot is still positioned for the retirement date you actually want.

If you have had a career break, check for National Insurance gaps and whether voluntary contributions could improve your state pension. For the self-employed, the biggest mistake is irregular saving. Treat pension contributions like a business cost, not an optional extra.

The late-stage wins are simple but powerful: save more, reduce debt, avoid unnecessary pension withdrawals, use tax relief properly and get advice before making big retirement decisions.

Everyone's retirement needs are different so whilst the Retirement Living Standards data is useful, it's no silver bullet. First step i'd suggest is to get a state pension forecast. Check if you're on track for the full state pension off the governments site. If not, look at whether voluntary top ups make sense. Secondly, think about what you'll need in retirement and then map your pensions, savings, rental incomes against that. Do you have enough or are you short? If you're short, consider additional contributions or working longer so you can build up a bigger pot? The other lever you have is to try and make the money work harder but that needs to be balanced against the risk of markets declining as you don't want to risk a big drop as you approach retirement.

While starting earlier is always better, the years immediately before retirement are often when people have the highest earnings and the greatest ability to increase contributions.
For those in a workplace pension, one of the simplest wins is increasing contributions whenever you receive a pay rise. If you receive a 5% pay increase and divert even half of that into your pension, you can boost your retirement savings without feeling a significant reduction in take-home pay. It's also worth checking whether your employer offers matching contributions, as failing to take advantage of this is effectively turning down free money.
People with a SIPP should review whether their investments still match their retirement timeline. I often see individuals sitting on large amounts of cash because markets feel uncertain. While some cash can be sensible as retirement approaches, being overly cautious too early can limit long-term growth.

The years leading up to retirement can be a golden window to make hay while the sun shines and get pensions pots and other investments and savings bolstered and aligned with a proper financial plan in preparation for retirement.

Working backwards from a retirement income goal tends to make most sense, and then planning for the periods where stock markets fall and other ad-hoc expenditure will dictate how best to structure things, and the amounts required.

People often forget that there's no national insurance on pension income, and part of the pot is tax free so to get a certain figure in your pocket each month takes far less than what you'd need from an equivalent salary.

It's also our experience that people tend to spend less later in retirement so planning a more smile shaped expenditure is a truer picture of how things can play out. Doing and spending more in the earlier years, then dipping down later before increasing towards the end if care at home or in a home happens.