Working out when you want to retire and how much you'll need when you do is crucial

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Few of us care to think very deeply about retirement. Nor is that surprising: the image we are often presented with is that of doddery old men and women forced to scrimp and save when they finally stop work - unable to afford holidays, decent clothes or proper food.

And there is an element of truth in that picture, at least for many pensioners today. Arguably, they are victims of a period in time when expectations of what the state would provide collided with increasingly urgent government drives to make us all take greater responsibility for our own lives.

But for those who still have a good many years to go before finally stopping work, there is plenty of time to do something. The word 'something' meaning, of course, saving more money.

But how much? The starting point is to work out how much you will need to live a comfortable life in retirement - and then figure out how to achieve that figure.

Calculate how much you will need

1. Work out an ideal income, after tax, that would allow you to pay off all your bills on time, including the mortgage, and still allow you a few treats: a good annual holiday, a couple of meals out each month, a new shirt and tie every now and then, that sort of thing.

2. By the time you stop work, there will be things you no longer need to spend money on. So deduct monthly mortgage costs and the seemingly endless financial support for your children, who will hopefully have grown up.

3. Retirement also means you don't have to spend so much on things associated with work itself. So take out the monthly cost of commuting, the suits and dry-cleaning bills, the takeaway lunches and coffees that fuel your day in the office.

4. Another thing to deduct is the amount you currently save into a pension or other saving scheme. By definition, you don't need to do that any more.

5. That said, you will probably have a hobby or an activity that may cost some money. So add back a reasonable amount for that.

Based on the above, you will have a rough idea of how much money you will need each month.

Many people find that figure tends to be about half to two-thirds of their current take-home income, although it is possible to dip below that amount if you need to tighten your belt.

How will you reach that amount? Here are a few ideas to start with:

- You will probably receive a state pension of some sort, though it may not be much.
- Your income tax bill will be slightly lower, so your savings will stretch further.
- You may already have savings set aside for your retirement, either privately or in one or more company pension schemes.

Bear in mind that to achieve the amount you need may take more money than you think. Inflation or low investment returns can affect the final value of your savings.

Use the pension calculator to work out how much you may need to save and what you might receive as a pension based on your current, if any, pension savings.

However, the most important thing is that you now have a target to aim for.

More pensions help: Are there better ways to save than in a pension?