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A third of people don’t know how much they need to contribute to their pensions every year to create a comfortable retirement, according to a MoneyAge article (11 November 2025).

Striking the right balance with pension contributions is important. Contribute too little, and you could leave yourself short in retirement. If you contribute as much as possible to your pension now, you might miss other goals or place pressure on your day-to-day budget.

So, asking “how much should I be paying into my pension each year?” is sensible.

You might have read answers to this question that apply a general rule to everybody, such as a certain percentage of your income or a target amount you should have at a particular age.

However, the reality is that there isn’t a simple answer that can be applied to everyone. A range of factors, from your current age to your desired retirement lifestyle, will affect how much you need in retirement.

Here’s a step-by-step guide on how to calculate what you may want to add to your pension.

1. Review your current pension and other assets

If you’re already contributing to a pension, or have in the past, gather your statements so you can understand your current position. The savings you’ve already made will act as a foundation for your future contributions.

Don’t forget to check for lost pensions. According to Pensions UK (24 October 2024), as much as £31.1 billion is sitting in unclaimed pension pots across the UK. Take some time to check if you’ve got any gaps – you might find a lost pot that could boost your retirement.

In addition to your pension, you may have other assets you plan to use to fund retirement, such as savings or investments held outside a pension, which you may want to include in this step.

2. Decide when you’d like to retire

When you want to retire will have a direct effect on how much you’ll need to save. If you hope to retire early, keep in mind that you’ll need to create an income for longer, and you may not receive any State Pension until you’ve been retired for some time.

3. Set out your desired retirement lifestyle

To accurately set a pension target, you need to understand what kind of lifestyle you hope to enjoy in retirement. If you’re envisioning plenty of luxury holidays, a new car every few years, and trips with friends, you’ll need to save more than if you’re happy with a more moderate lifestyle.

With a lifestyle set out, you can start to consider how much you’ll need as a regular income to maintain it. Remember to factor in unexpected costs and the effect inflation is likely to have on your cost of living.

With an estimated required annual income, you can work out how much you’ll need in your pension by considering how long you’ll spend in retirement.

It’s wise to look beyond the average life expectancy, as doing so could leave you facing financial difficulty if you live for longer. The Office for National Statistics life expectancy calculator (14 February 2025) suggests a woman aged 65 has an average life expectancy of 88. However, there’s also a 1 in 4 chance she’ll celebrate her 94th birthday.

4. Review how your pension will grow

The good news is you don’t need to contribute the total amount you need to secure your desired lifestyle.

First, your pension contributions benefit from tax relief at your marginal rate of Income Tax.

Assuming you don’t exceed the pension Annual Allowance (£60,000 in 2025/26 or 100% of your annual income, whichever is lower), you’d only need to contribute £80 to increase your pension by £100 as a basic-rate taxpayer. If you’re a higher- or additional-rate taxpayer, the amount you’d need to contribute would fall to £60 and £55 respectively.

Second, your pension is usually invested with the aim of delivering long-term growth.

As you’ll often be investing through a pension for decades, the compounding effect of investment returns can help your pension grow significantly over time.

However, it’s important to note that investment returns cannot be guaranteed.

5. Assess how much your pension contributions need to be

With all this information, you can work backwards to calculate how much you’d need to add to your pension each year to achieve your desired lifestyle.

Using a cashflow model as part of your financial plan can help you bring all this data together and visualise how your wealth might change. For example, you might model how your pension would grow if you increased your contributions by 2% compared to 4%.

You can also model other scenarios, such as the age you’ll retire and changing your income needs.

Regular pension reviews can help make sure you’re on track. The outcomes of a cashflow model cannot be guaranteed, but it can be useful when you’re trying to answer the question “how much should I contribute to my pension?” and others like it.

Work with us to create a retirement plan

Calculating how much you should contribute to your pension each year is just one part of your retirement plan. You might also need to know how the money will be invested when it’s in your pension, or how to access the savings when you’re ready to create an income.

We can work with you to create a complete retirement plan to prepare for the next chapter of your life.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

Every investor wants to be successful. Over the next few months, you can read about ways to improve your investment strategy.

Defining success against the performance of others can encourage a short-term mindset.

What “success” means when investing is different for everyone, and defining what it means for you is crucial.

You might be tempted to measure success by achieving a certain average annual return, selecting the best-performing stock, or beating market averages. While these can be useful indicators of your portfolio’s performance, defining success by these measures may not be the best approach.

These definitions of success could even be harmful, as they may encourage short-term thinking.

For example, in a bid to choose the best-performing stock in an index, you might be tempted to make knee-jerk decisions based on the latest headline or piece of information you’ve read. Constantly adjusting your portfolio to reflect short-term movements could mean you miss out on larger trends that may benefit your portfolio.

Rather than measuring the success of your investments against what others have achieved, focusing on your reason for investing could be useful.

How investing success could support your wider goals

Investing can feel like a competition where you need to beat the returns of others. However, this mindset might not align with your needs. For instance, if you set out to beat the average annual returns of an index, you might decide to take on more investment risk than is appropriate for you.

Rather than seeing investing as something you need to try to “win”, viewing it as a tool to support your financial goals can be useful.

The aim of investing is to support your wider goals, so starting with your reason for investing could provide some clarity on what “success” means for you.

Imagine you’re investing in your pension to create financial security later in life. Success might be creating a pot that will provide a sustainable income of £40,000 a year from the age of 60.

To do this, you may calculate that you need to achieve an average annual return of 5%. If you focus on success as a competition, rather than the desired outcome, you might be tempted to chase higher returns even if doing so could place your retirement at risk.

These four factors could help you define what investment success looks like for you.

1. Your investment purpose

Setting out a well-defined goal can give your investments purpose. This goal can then inform the decisions you make and allow you to see if you’re on track for success.

Without a clear goal, you might choose investments that aren’t aligned with your needs, and place your chance of success at risk.

2. The investment time frame

As well as your reason for investing, you should also define when you want to achieve the goal. If you’re saving for retirement, when do you want to give up work? Or if you’re investing on behalf of your child, when do you plan to give them access to the assets?

The investment time frame is important for two key reasons.

First, it’s important for the success of your goal. Saving enough for retirement, but reaching that point five years later than you’d hoped, could be disappointing even though you’ve reached the target amount.

Second, the investment time frame will affect what investment strategy is right for you. As a general rule, the longer you’ll be invested, the more risk you can afford to take. However, other elements of your finances will also affect your risk profile.

3. Your risk tolerance

All investments have some risk involved. However, the amount of risk you take varies between different assets and opportunities. As a result, it is possible to invest in a way that reflects your risk profile and circumstances.

As well as the investment time frame mentioned above, factors like your current financial situation, the other assets you hold, and your attitude to risk may play a role in determining your risk profile. Your financial planner can help you understand your risk profile.

4. The required investment return

With a clearly defined goal and risk profile, you can estimate what returns your investments may deliver and whether they’ll support your goal.

You might find that you’re on track, which could offer peace of mind. Alternatively, if you discover a shortfall, you might adjust your target or take steps to close the gap, such as increasing the amount you invest each month.

Keep in mind that investments experience volatility. Annual returns will likely rise and fall each year, and it’s often sensible to focus on long-term trends when reviewing your success.

Contact us

If you have any questions about your investments or would like to talk to our team about how we can work together, please get in touch.

Next month, read the next successful investing blog to discover elements you might consider when building an investment portfolio for success.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

This guest blog was written by Chris Budd, who wrote the original Financial Wellbeing Book as well as The Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.

Humans are programmed to act in certain ways. We have behavioural biases built into us, created over the history of mankind, to keep us safe in the face of danger.

For example, we don’t like losing things. This is because our ancestors would be faced with a very nasty situation if they stumbled across a beast while out hunting, and realised that they had left their spear at home.

In today’s society, however, we are considerably less likely to be faced with a sabre-toothed tiger. Some of our behaviours don’t always act in our best interests, and some can even be taken advantage of by others. This is especially true around financial decisions.

Here, then, are three behaviours that we all exhibit to one degree or another, how they might not be serving us well, and what we might do about it.

The endowment effect

Researchers asked candidates to value a coffee mug. Half of those candidates were given the mug in advance, and half were not. The candidates who already owned the mug valued it around twice as highly as those who had not seen it before.

This is called the endowment effect. It describes how we tend to value something we already own more highly than its real worth.

There could be many reasons for this. Perhaps it holds sentimental value. Perhaps we overpaid in the first place, but we don’t want to admit it.

This also means that we often pay more for something than it is worth. Marketing and advertising take advantage of this. Take the trial period. At the end of that trial period, you are not only more likely to buy, but you are likely to be willing to pay more than you would before you had used the product.

Awareness is the enemy of the endowment effect. To stop ourselves from overpaying for something, or overvaluing stuff we already own, we should try and take a dispassionate and arm’s length view, and perhaps do some research on real valuations.

Framing

Framing describes a form of expectation.

An example of this is the 17-year-old daughter going to a party. She wants to be out until midnight, but knows that her parents wouldn’t normally allow this.

As she’s getting ready, her father asks: “What time will you be home?”

The daughter replies: “About 2 o’clock.”

“You will not, my girl,” says the father. “You’ll be back by midnight.”

Framing happens all the time with money. For example, when you visit a financial adviser, what are you expecting? Presumably, advice on your finances. And yet the adviser is just as interested in hearing about your plans for the future.

Framing is used in marketing all the time. It is why prices are so often stated as £9.99. Why is yoghurt 90% fat-free, not 10% fat? Once you understand framing, you will start to see it everywhere.

We can also positively use framing. Just a focus on strengths rather than weaknesses can result in making better financial decisions. This can make us feel more able to manage our finances and address some of those issues that we might have been avoiding.

Loss aversion

We feel the loss of something significantly more than its equivalent gain. Consequently, we try to avoid losses.

This is why the special offer with a limited time is used so much. Research from Which? suggests that most products on sale on Black Friday are actually cheaper at other times of the year.

Loss aversion is often applied to investments, whereby we might be less likely to invest if there is a risk of loss, even though the potential upside might be high. It can also lead to poor financial decisions as we try to avoid poor outcomes, which prevents potential positive outcomes.

Framing can actually help here. Taking some time to properly understand the potential loss (‘What’s the worst that can happen?’) can reframe the decision to fully take into account the upside.

Bonus tip: Avoid advertising

I go to great lengths to avoid adverts. When I go to the cinema, my family go in to watch the trailers and adverts. I sit outside.

Research has shown that advertising makes us unhappy. It presents unrealistic and unattainable images, then suggests that the only way we might achieve those versions of success is to buy that particular product.

Marketing and advertising are all around us, and they’re all designed to get us to spend money that we might not necessarily want to, or even able to afford to, spend. A little bit of work and knowledge to understand our behaviours and how to change our habits can make a big difference to our relationship with money.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The last 12 months have been interesting for investors, with the market experiencing volatility. Read on to discover valuable insights from 2025.

1. Many markets have performed well despite volatility

If you simply read the headlines from 2025, you might think the markets performed poorly. Worries about high inflation, trade tariffs, and sluggish economic growth have dominated the media.

Yet in many cases, the overall trend has been upward.

The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange by market capitalisation. On 2 January 2025, the FTSE 100 was at 8,260 points. During 2025, there were dips, but on 21 November 2025, it stood at 9,539 points.

It’s impossible to guarantee market performance. However, when you look at long-term trends, markets have trended upwards. Even after experiencing sharp dips, markets have typically recovered when you analyse market performance over several years.

While investors might worry about short-term dips, 2025 suggests focusing on the long-term can be reassuring.

2. Investors could benefit from tuning out the noise

One of the biggest factors influencing short-term market movements in 2025 has been trade tariffs imposed by the US.

Indeed, the FTSE 100 reveals several steep falls in April 2025 that coincide with announcements from US President Donald Trump about tariffs. Fears about the effect these tariffs might have on businesses around the world led to markets dropping.

However, as the overall trend of the FTSE 100 emphasises, the initial strong reaction was followed by a market bounce back as fears eased.

Investors who held their nerve through these downturns may have benefited from the subsequent recovery. By contrast, investors who panicked and sold their holdings might have suffered losses.

Tuning out the noise and focusing on your objectives and financial circumstances might deliver a stronger long-term performance.

3. The markets are impossible to consistently and accurately predict

If you made predictions about the markets at the start of the year, how accurate were your guesses?

So many factors affect market movements that it’s impossible to consistently and accurately predict what will happen. Even seasoned professional investors with a trove of resources at their fingertips get it wrong at times.

If you can’t foresee the exact market peaks and troughs throughout the year, it’s impossible to time the market. As a result, you may miss out on potential gains.

Rather than timing the market, investing in assets that align with your goals and holding them over the long term could yield better results.

4. Avoid following trends that don’t align with your investment strategy

2025 has seen a huge popularity boost for AI. More companies are adopting AI into their operations, and people are increasingly using it in their daily lives.

This led the value of some AI companies to soar, and towards the end of the year, fears of a market bubble emerged. According to the Guardian (18 November 2025), Sundar Pichai, CEO of Alphabet (Google’s parent company), said “no company is going to be immune” if the AI bubble bursts.

Those concerns caused the market valuations of AI companies to fall in November 2025.

Investors who only invested in AI stocks because of the hype may have been disappointed and suffered losses. While it can be difficult, avoiding herd behaviour and focusing on your strategy could be valuable.

5. Your investment goals are central to your strategy

As the above points highlight, short-term market volatility isn’t going anywhere. As an investor, sticking to a strategy that reflects your goals could deliver long-term returns.

So, reviewing your goals as you head into 2026 might be beneficial. If your objectives have changed, you may want to update your investment strategy to reflect this.

Talk to us about your investments

We can work with you to review or create an investment strategy that suits your objectives. Please get in touch to arrange a meeting.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Savvy singers and songwriters can generate an annual income by releasing a Christmas hit. As you shop for loved ones, consider giving a gift that will continue to give value over time.

Many Christmas songs are replayed every year. Indeed, songs you’ve listened to this year can evoke nostalgic childhood Christmas memories. For the artists behind the tracks, a Christmas hit provides an income boost over the festive period.

According to The Standard (19.12.2024), Mariah Carey’s 1994 hit ‘All I Want For Christmas Is You’ brings in around $3 million (£2.28 million) a year. Similarly, Canadian newspaper Times Colonist (26.12.2024) suggests Michael Bublé could earn as much as $6 million (£4.56 million) during the festive season from two songs – ‘Holly Jolly Christmas’ and ‘It’s Beginning to Look a Lot Like Christmas’.

Despite being released years ago, these singles continue to make money for the artists.

While you’re browsing festive perfume sets or the latest gadgets, you may want to consider how you could offer a gift that will do the same for your loved ones.

Of course, singers can’t guarantee that their tune will be a hit the year it comes out, let alone decades later. Similarly, it’s impossible to know exactly what’s around the corner and guarantee how your gift might grow in the coming years. It’s important to weigh up the different options, understand the potential risks, and assess what’s right for you and the recipient.

3 ways you can gift wealth to support life goals

1. Deposit money into a savings account

One of the simplest ways for your gift to increase is to deposit the money into a savings account, where it will earn interest.

This could be a great option if you want to improve the financial security of your loved one by creating a buffer or helping them reach short-term savings goals.

Keep in mind that interest rates might not keep pace with inflation, which could lead to the value of savings falling in real terms over the long term. Speaking to your loved one about how they intend to use the money could help you identify if a savings account is the best place for it.

2. Contribute to an investment portfolio

If your loved one is working towards a long-term savings goal, investing the gift might be an option you want to explore.

Investments provide an opportunity for your initial gift to grow at a faster pace than inflation and increase in real terms over a long period. However, volatility and risk are part of investing, and returns cannot be guaranteed.

Be sure to speak to your loved one about why they’re saving and their current financial circumstances to assess if investing the gift is the right option.

3. Add money to your loved one’s pension

Finally, you could aid your loved one’s retirement dream by adding money to their pension.

A pension provides a tax-efficient way to invest as the returns aren’t liable for Capital Gains Tax. Instead, the pension holder may pay Income Tax on withdrawals. With many workers struggling to balance short- and long-term goals, a pension boost could ease some of their concerns about security in retirement.

You should note you cannot usually access the money held in a pension until you turn 55 (rising to 57 in 2028). As a result, be sure that your recipient wants to use the gift to support their retirement.

Gifting assets could make sense from an Inheritance Tax planning perspective

If your estate could be liable for Inheritance Tax (IHT), gifting your assets during your lifetime might be tax-efficient.

In 2025/26, the nil-rate band is £325,000, and if the total value of your estate is below this threshold, no IHT will be due. In addition, your estate can use the residence nil-rate band, which is £175,000 in 2025/26, if you leave your main home to children or grandchildren.

You can pass on unused allowances to your spouse or civil partner. In effect, this means couples can leave behind up to £1 million before IHT is due, when planning together.

The portion of your estate that exceeds IHT thresholds will usually be taxed at 40%, so this could significantly reduce how much you leave behind for loved ones.

As a result, some people choose to gift assets during their lifetime to reduce the value of their estate. However, this isn’t as straightforward as it first seems. Not all gifts are considered immediately outside of your estate for IHT purposes.

So, working with a financial planner to make gifting part of your estate plan could help you pass on your assets tax-efficiently.

Contact us to discuss gifting

While gifting might be associated with the festive season, you can make it part of your wider financial plan too. Please get in touch to talk about how you’d like to pass on your wealth and ways to do so tax-efficiently.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

The Financial Conduct Authority does not regulate tax planning or Inheritance Tax planning.

With the year drawing to a close, you might be thinking about what you can look forward to in 2026. If you love to explore new destinations and tick off bucket list experiences, Lonely Planet has put together a list of the best experiences of 2026.

Whether you want to relax, get active, or learn more about a different culture, these seven experiences could be perfect for your next adventure.

1. Stay in a train carriage in Kruger National Park

Going on safari features on many bucket lists, and in South Africa, this unusual accommodation could make it even more memorable.

Kruger National Park is one of Africa’s largest game reserves, with the “big five” – lions, leopards, rhinos, elephants, and buffalo – all residing here, as well as many other mammals and a diverse bird population.

There are a number of ways to experience Kruger National Park, but sleeping in a train carriage on a century-old railway bridge above the Sabie River at Kruger Shalati is a unique experience. As well as game drives, you can take in the landscape and animals from the comfort of your own room.

2. Cruise the Mekong River

Watch the world go by and take in the sights of Cambodia and Vietnam by cruising down the Mekong Delta. If you want a slower-paced break, this could be the perfect option for you.

The Mekong Delta is known as Vietnam’s rice bowl, so expect to see lush rice paddies and tropical fruit orchards as you travel through the waterways.

There are often plenty of stops along the way, from cycling trips and craft villages to excursions and ancient temples. You might even experience a vibrant floating market.

3. Visit Willamette wine country

When you think of famous wine territories, Tuscany, Napa, or Bordeaux might come to mind first. But if you want to experience an unsung region, a trip to the Willamette Valley, Oregon, USA, could be a great choice for 2026.

With fewer tourists than alternatives, you can really enjoy a weekend of tastings and exploring the charming, historic towns.

The region is famous for its pinot noir and other cool-climate wines. Eyrie Vineyards in McMinnville is where Oregon’s pinot noir production began 60 years ago. Find out more about the traditional techniques they use on a visit to the tasting room.

4. See the Philippines by bike

If you want to get active on your next adventure, why not try exploring the Philippines by bike?

Lonely Planet recommends taking in the smallest province in the Philippines, Batanes, by renting a bike. The province consists of three main inhabited islands, and with little traffic congestion, it’s often easy to get around on two wheels. It’s a fantastic way to take in the windswept landscape.

As you cycle from the capital Basco, visit Basco Lighthouse, admire the view of Mt Iraya, and explore boulder-strewn beaches in a day. If you’re feeling adventurous, you could take your bike on a boat to Sabtang Island, which is known for its traditional Ivatan culture and unique stone houses.

5. Explore the Great Victorian Bathing Trail in Australia

While Victoria, Australia, is known for its sandy beaches, the new 550-mile Great Bathing Victorian Trail offers a fresh way to explore. The road trip links historic and newly built springs and beach baths across the state – you’re sure to feel rejuvenated after luxuriating in the steaming stone pools.

As well as taking a dip in the springs, there are coastal hiking trails, chances to learn more about First Nations culture, and wellness activities, like yoga.

6. Become a citizen scientist in Peru

Have you ever dreamed about exploring a tropical rainforest and learning more about the unique habitat? Peru might just be the perfect place for you to visit.

According to Lonely Planet, Tambopata, Peru, has become known for its hands-on education approach to Amazon ecotourism pioneered by Rainforest Expeditions. The organisation pairs travellers with field biologists. You could find yourself placing a camera trap along jaguar migration paths or recording the calls of primates on a trip here.

7. Discover the night sky in New Zealand

New Zealand is aiming to become a Dark Sky Nation – a country recognised for protecting its night sky from light pollution. Already, there are eight certified Dark Sky Places in the country, making it the perfect place to lose yourself in the night sky.

One of the most accessible places to see the stars shining brightly is Wairarapa, which is just over an hour from Wellington. You may book a tour with astronomers who can offer interesting insights. For a truly special visit, plan your trip for mid-June to coincide with Matariki, a cluster of stars also known as the Pleiades, rising over the horizon to mark the Māori new year.

Of course, during the day, New Zealand has plenty to offer travellers, too, including stunning landscapes and its rich culture.

Searching for more incredible experiences?

If you’re looking for even more inspiration for your next adventure, Lonely Planet’s full list of the best experiences for 2026 contains 18 more unbelievable ways you could make 2026 a memorable year. Options range from spending the night in a Ryokan in Japan to tracking elephants in Namibia.

You don’t even have to travel far to tick off some of the bucket list experiences – two are in the UK. Attending a Premier League game and exploring street art in Bristol are both featured.