Here’s how much you need squirrelled away today to fund a comfortable retirement at 68

A comfortable retirement and all that comes with that is something that we all think about and dream of.

But how we will get there, and whether we’re squirrelling away enough to achieve our goals, is not usually at the forefront of our minds.

According to the latest projections from the Pensions and Lifetime Savings Association (PLSA), a trade body, someone who wants a “comfortable” retirement would need at least £37,300 a year (£54,500 for couples), which would fund three weeks in Europe a year, theatre trips and regular beauty treatments.

The minimum income needed for basic living would be £12,800 a year, or £19,900 for a couple.

But knowing whether you’re on track for a comfortable retirement full of lavish holidays, or whether your future resources seem more sparse, can be difficult.

Telegraph Money asked Aegon, the pensions firm, to work out how much a worker would need to have saved throughout their lives to achieve an annual income of £37,300 after the age of 68, when most young people today will receive their state pension.

Are you on track?

In order to hit this target, said Steven Cameron, of Aegon, on top of a full state pension, the retiree would need a pot worth £557,800 in today’s money.

A saver starting at age 22 would need to have contributions of £490 a month going into their pension, increasing each year in line with earnings.

Mr Cameron said: “This may seem out of reach but for employees, your employer is required to make a contribution to your workplace pension and some are prepared to match the employee pound for pound.”

This would reduce the cost to the individual to £245 a month.

However, the generous tax relief offered by the Government on money put into a pension means a basic-rate taxpayer would need to save £196 from take-home pay, while a high-rate taxpayer would need to put away £147.

These figures are based on a number of assumptions.

First, that earnings and pension savings will grow by 3pc a year and the full state pension, currently worth £10,600, will also grow in line with inflation.

Similarly, Aegon assumed the saver’s pot would grow 4.25pc a year after fees. It also assumed long-term inflation would be 2pc a year.

We also asked the firm to calculate how much a worker needs to have saved by each age – in five-year intervals – to be “on track” assuming their contributions were £490 a month in the future.

The results can be seen in the table below. The saver would need £24,000 by age 25, and this should have grown to £66,900 by the age of 30. By 55, the earliest age you can access your pension, the saver should have the intimidating sum of £350,300.

Of course, late starters or those who have not been saving at a high enough level could catch up by increasing contributions.

“If you’re already above age 22, and haven’t been making any pension provision, then you’ve got some catching up to do, and the older you are, the bigger the catch-up challenge,” said Mr Cameron.

“It’s important to note that these are the fund values you’d need at each age along with an ongoing contribution of £490 a month increasing with earnings to be on track for that £37,300-a-year pension.

“If you are planning to pay in less, you’d need a higher current fund and if you have a lower fund, you’d need to pay in more in the future.”

The figures are all based on current annuity rates which are significantly higher than they have been in recent years. If annuity rates fall from current levels, you would need a larger fund to secure a £37,300 income.

However, the majority of people accessing their pension since the 2015 “pension freedom” rules came into force do not buy an annuity. Instead they take ad-hoc or regular withdrawals from “pension drawdown” accounts, leaving the rest invested in the stock market.

Wealth manager Quilter estimates that a 66-year-old drawing down their pension would need a pot of £450,000, which would be exhausted by age 88. This also assumes you are receiving the full state pension.

This is far less than what you would need if buying an annuity.

Have you worked out exactly how big your pension needs to be for you to retire comfortably? We want to hear from you. Email: money@telegraph.co.uk