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No matter how much you love your job, there are few people that don’t look forward to the day when they no longer have to be a slave to the alarm clock. However, with the pressures on household finances, it is very easy to skip saving and assume that you will be able to catch up on retirement planning when you have more cash. But how do you work out how much you need to avoid poverty in your twilight years and what things do you need to take into consideration?

To start with, how you plan on spending your retirement impacts a great deal on how much money you need to set aside. If you hope to travel the world and do all of the things you haven’t had the chance to do up until now, you will obviously need a more substantial pension than if you are happy to stick to more or less the same lifestyle that you have at the moment.

Of course, when you plan on retiring makes a significant difference. Those individuals who plan on remaining at work for as long as possible will have longer to save and will need to generate a smaller pot of money. Anyone who dreams of quitting work by the age of 50 needs to start saving early and build up a much larger pension fund to allow them to enjoy their retirement without financial woes.

Knowing how much social security you will collect when you retire is another important consideration. To be able to calculate how much you need to save accurately, you will need to get an estimate of how much you will get in benefits from the state.

Where you opt to put your savings and what kind of investment vehicle you choose also has a bearing on how much you need to put aside. A more aggressive investment fund offers the possibility of greater returns but also is far riskier than a more cautious approach. If you do opt to try to generate a higher rate of return it is recommended that you remove your money to a safer investment in the few years before you retire as you will not have time to recoup your losses if the worst happens.

Of course, the age you start saving dictates how much you need to set aside each month. Those who start at a young age can afford to sacrifice less of their earnings than those who do not start their retirement planning until later in life.

Your current salary can provide a good indicator of how much money you want to receive each year. As a general rule of thumb, you need to multiply how much money you think you need to live on each year (minus the social security you will collect) by 25. This is the ultimate sum you need to amass in order to be able to retire without worrying about not having enough cash.

Once you work out how much you need to save before you retire, finding the cash to set aside can be a challenge. It can be a good idea to review all your finances and see if you are able to reduce how much you pay by switching providers. For many people, their property is the biggest expense and checking the rates of other mortgages at Moneysupermarket can help to identify whether there are savings to be made.