WORKERS need to save as much as 40 PERCENT of their salary every month to have any hope of achieving a decent retirement, analysis has revealed.
Any 40-year-old who has not already made provision needs to stick & pound; 4 IN EVERY & pound; 10 they earn into a pension.
Even those in their early twenties should be saving 15 per cent of their income to avoid spending their elderly years in poverty, according to a report by the Labour-backed Independent Review of Retirement Income (IRRI).
This equals a huge & pound; 322 a month for someone earning a typical wage of & pound; 25792 a year, according to the most recent earnings figures from the Office for National Statistics.
However, putting away 15 per cent a month is typically only enough for someone who has started saving 40 years before retirement, shows exclusive analysis for Express.co.uk by pension provider Aegon.
This jumps to a whopping 40 per cent of your salary if you were to start saving in your forties - for a worker on the average wage this equals a massive & pound; 859 a month.
It means that workers who did not start saving in their twenties but hope to retire in their sixties, need to pay far more into pension pots.
Of course, the amount you need to save depends on a number of other factors including, how much income you want to receive in retirement and when you hope to finish work.
But, for example, if you start saving in your thirties and want to finish work before you're 70 on half the amount you earn before finishing work, you need to be saving 25 per cent of your salary, according to Aegon.
Taking into account the state pension, someone who finished work earning & pound; 27000 could then expect an annual income of around & pound; 21500 if they stuck to these savings guidelines.
The calculations assume investment returns of around two per cent above your salary inflation, and that it would cost & pound; 20 to buy & pound; 1 of income at retirement.
The average retirement pension pot at retirement is just & pound; 28000 - even though at least & pound; 230000 is need for the typical home to retire on two-thirds of pre-retirement income, found the IRRI study.
At the same time, fewer than half of people of working age are saving for retirement.
The IRRI predicts the lack of adequate income means that there will be a 'crisis point' and "it will happen much sooner than people possibly imagine".
Steven Cameron, regulatory strategy director at Aegon UK, said: "With so many other financial pressures, saving adequately for a comfortable retirement can be daunting.
"Even if you start saving 40 years before you plan to retire, funding for half of your final earnings may require a contribution of around 15 per cent of your salary.
" But if you leave it till later, the contributions required are even higher meaning it's really important to start saving as early as possible.
"Thankfully, many employees benefit from a contribution from their employer which can be hugely beneficial.
"If your employer is prepared to pay say nine per cent of your salary, the balance needed from you as an employee falls to six per cent."