No, you can't retire on £50,000!

£50,000 will give you a paltry pension for your retirement.

You could do a lot with £50,000. You could fund yourself through a three-year university course (including tuition fees and living costs).

Travel the world on a budget for up to five years. Or slap down a 25% deposit on a £200,000 property.

Yes, £50,000 can go a long way.

But there is one thing you can’t do with it. You can’t fund a comfortable retirement.

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The £50,000 question

Worryingly, many people think you can, especially younger people. When insurer Aviva asked 16 to 24 year olds how much they wanted in their pension at retirement, the average figure was £48,400.

Young people can be forgiven for being so wide of the mark. Retirement is decades away. They probably haven’t given the subject much thought.

But they should. You will need a lot more than £50,000 in your pension pot if you want to live your final years in comfort and ease. And unless you start saving when you’re young, it will be a struggle.

How much!

Let’s say you are retiring today with a £50,000 pension pot, and used the money to buy an annuity, an income that lasts you for the rest of your life.

At age 65, that £50,000 would buy you an annuity worth just £2,800 a year.

That works out as a meagre £233 a month. Or around £54 a week.

You would get even less if you bought a joint life annuity to cover your partner after you die, and less still if you wanted that income to rise in line with inflation.

These numbers look particularly bad because rock bottom interest rates have slashed the returns on annuities.

These figures may improve in future. Let’s hope so.

Tricky maths

You should also get your state pension on top, which is currently £107.45 a week, giving you total income of around £160 a week. That’s just £20 a week more than you would get if you claimed pension credit, the government’s mean-tested measurement of poverty in retirement.

It works out as £8,400 a year, roughly one-third of the national average full-time salary of £26,200.

The sums don’t add up. £50,000 into the rest of your life just doesn’t go.

Wiser guys

Youngsters aren’t the only ones who are naive about how much they need for their retirement. Those aged between 25 and 34 set their pension target at a slightly higher £78,000.

Between 35 and 44, the figure rises to £88,000. And between 45 and 54, people reckoned they needed £102,000 for a worry-free retirement.

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The time is now

Young people may be naive, but they do have one thing on their side. Time. Many people squander this, because they think saving for a pension is something they can do later.

The truth is, there is never an easy time to save, because when you’re older, you have family commitments, such as a mortgage and children. So don’t hang about.

The earlier you start, the easier it will be. If you start paying into a pension, say, 25, you need to save just £91 a month to have £100,000 in your pension pot by age 65 in today’s terms. This figure assumes you get 3.5% investment growth a year after charges and inflation. If you wait until age 35, you need to save £148 a month. And if you delay until 45, you will need to save £266 every month. That’s almost three times as much.

Start with small amounts, if that’s all you can afford, but please start.

What’s the forecast?

Older people should start by working out out exactly how much they have already saved. Incredibly, just one in 10 people know how much their pension is worth, according to new research from Nationwide.

Dig out the latest annual statements for your company and personal pensions, to see how much each is worth. The Pension Tracing Service can help you track down old plans. You should also get a state pension forecast.

You can do it!

Saving enough for a decent retirement may sound daunting, but the government gives you a helping hand, by granting tax relief worth 20%, 40% or 50% of your contributions, depending on your tax bracket.

If you have access to a company pension scheme, your employer may give you a further boost, by matching your contributions with a payment of its own.

From October, the new auto-enrolment scheme should ensure that millions get access to a company pension for the first time, including employer and government contributions.

Don’t squander it.

If you don’t trust pensions, then invest using your tax-efficient Isa allowance instead.

One retirement, going cheap

I wish I could be the bearer of better news, but there isn't much of that around, especially with the Government getting cold feet over its plans for a £140 a week state pension.

In truth, even £100,000 isn’t enough for a comfy retirement, given today’s atrocious annuity rates. At age 65, it would buy you income worth just £5,700 a year.

That isn’t much return for half a lifetime of saving, but frankly, what alternative do you have? You want to have a comfortable retirement, if you possibly can.

And you won’t buy one of those for £50,000.

Intelligently monitor how much you'll have available to you in retirement, and track your current wealth with Plans, the secure application from Lovemoney.com Try Plans free for 30 days and get your personalised wealth report >

For a different take on how much you need to save for your retirement, read It doesn’t cost much to retire well.

More on pensions:

How much you need to save for retirement

Become a pensions expert in five days

Auto enrolment: how NEST will invest your compulsory pension