How much do I need to retire?

• How much money you might need to save for retirement
   
• What additional fees associated with your pension you need to consider

This is a loaded question with a complex  and individual response, so why did we decide to ask it? Because it's vital to know!

When thinking about this, the rule of thumb is to estimate you'll need 60% of your annual income to continue living in the same style - this takes into account the lesser costs of living because it assumes you've paid off your mortgage and the costs associated with work have dissipated.

In past lessons, we've explored determining your retirement activities and life expectancy.

The boring retirement costs can include council tax, rent or mortgage payments, private health insurance, household bills, life insurance and pension fees.

And the unexpected (or unavoidable) costs can be ill health, care, nursing homes, housing or car damage, helping out family and funeral costs.

Factoring in your ideal retirement plans with expected living costs will help you work out your ideal yearly pension income and achieve it.

Once you have a number in your head how much you might need, either use a retirement calculator or a proxi to calculate how much you need to put aside.

Please see the module on calculating important amounts for a step by step approach.

Here are some of the most common fees to expect:

• Annual management charge - covers the cost of managing your pension, including investing contributions and creating statements.
   
• Underlying fund fee - this may be charged for the management of each fund.
   
• Platform fee - if you use an online platform to manage your pensions, you'll likely be charged a platform fee to cover admin costs.
   
• Policy fee - a rare fee to see in modern pensions, but worth checking if your older pensions include this admin fee.
   
• Bid / offer spread - Transaction costs to and from funds.
   
• Fund switching fee - If you want to move your pension fund, you may be charged a fee.
   
• Inactivity fee - yes, you may even be charged if you stop making regular contributions. Check your pension contract fine print!
   
• Pension transfer fee - If you want to move your entire pension, you'll likely be charged for it.
   
• Early exit charges - If you started your pension pre 31st March 2017, you might be charged a fee to remove your money early. That being said, if you remove your money before you're 55, you may be charged 55% tax!