RACHEL RICKARD STRAUS: You need more than £50k a year to retire comfortably. Here are the simple tweaks to get you there

Could you cough up £43,100 a year for the rest of your life and never earn another penny? No, I couldn’t either.

Yet the pensions industry estimates that this is how much someone typically needs to achieve a comfortable lifestyle in retirement (couples need £59,000). And those figures are after tax, by the way. Before tax, you should be pocketing £50,887 – or £67,464 for couples.

If you think that’s a challenge, you’re not alone. Fewer than one in 10 households are on track to achieve a comfortable retirement that involves weekend getaways, treating loved ones to occasional lavish meals, and replacing tired bathrooms and kitchens every 10 to 15 years.

But even more worryingly, a new study last week found that around five million people – a third of workers saving for a defined contribution pension – are not even close to meeting a minimum pension standard.

For people on low incomes, this percentage rises to two-thirds, according to the report from the Institute for Fiscal Studies (IFS).

To give you an idea, a minimum standard of living costs around £14,400 a year (£22,400 for couples), according to figures from the Pensions and Lifetime Savings Association. That leaves you with around £95 a week to spend on groceries, £100 a year for train tickets but no car, and a week-long holiday in the UK each year.

Rather than despair, the IFS has set out to improve the picture and has drawn up a list of ways to help everyone achieve a minimum level of retirement income.

Before you dismiss them as just another think tank report, here’s why the IFS’s ideas are worth paying attention to. They’ve attracted a particularly keen and influential listener: the pensions secretary. At an event in Westminster to launch the report last week, Emma Reynolds MP could not have emphasised more emphatically how highly she holds the IFS and its work on pensions. “We greatly value the expertise of the IFS, the strength of your research and the contribution you make to the public debate on pensions policy,” she cheered.

‘And I look forward to working with the IFS on your own pensions review and our own pensions review.’ And if you needed any more proof that the IFS’s ideas can become government policy, it’s this: Emma Reynolds has not left.

When ministers attend an event, they typically make a short speech, enjoy the applause, and then disappear in a fit of urgency and importance.

Instead, Reynolds took the floor and offered to answer questions (although she dodged the question about her views on pension tax cuts) and then sat in the front row for an hour to listen intently to the presentations.

What does the IFS propose?

The most radical proposal was that employees should receive pension benefits from their employers, even if they choose not to contribute themselves.

Currently, under the rules for automatic enrolment, employers must pay a minimum of 3 per cent of an employee’s salary into their pension, and the employee must pay a minimum of 5 per cent. However, if the employee chooses not to pay, the employer pays nothing.

This single change to the rules could boost workers’ pensions by £4bn a year, says Mubin Haq, chief executive of the Abrdn Financial Fairness Trust, which worked with the IFS on the report.

The danger is that employees may be more likely to opt out of the pension scheme themselves (which is rarely a good idea) if they are still receiving contributions from their employer.

It was also proposed that automatic enrolment should be open to everyone aged 16 to 74 – a huge increase from the current 22 to retirement age.

And if the IFS gets its way, workers earning £35,000 or more would automatically pay more into their pensions. For example, they could pay 12 per cent on earnings above £35,000 – with the extra cost borne by them, not their employer.

At the moment, auto-enrolment only kicks in on incomes above £6,240, but the IFS is proposing to reduce this to zero. That would clearly be good for people’s pensions, but hard on those on low incomes.

But to make it easier, the IFS suggests putting these extra contributions into a savings account that you can access when needed – or alternatively you can save them for your retirement.

The IFS also proposed rolling out a form of auto-enrolment for the self-employed. Only 20 per cent of self-employed people with profits above £18,000 a year are saving for a pension. If you think the pension outlook is worrying for workers, it’s nothing compared to what lies ahead for millions of self-employed people.

Are they good ideas?

Well, they add complexity to the auto-enrollment system that succeeds precisely because of its simplicity. The current system is easy to understand, requires no employee involvement, and just ticks away in the background. We’ll have to see if tweaks and changes upset the balance.

But the IFS reckons it could boost the pensions of people on the way to low and middle incomes by £1,400 to £2,100 a year – and reduce the take-home pay of people on lower incomes by less than 1 per cent. Not bad. It might not get us to a comfortable retirement, but it could make a difference.

Your tip to save £5,000 on a facelift…

How do you decide when to save and when to spend more money?

I got some real pearls of wisdom from readers when I asked this question last month. Molly G responded to my comment that I had been hesitant about treating myself to a coat.

She emailed: ‘My response to you is please stop worrying and let yourself go. £60 for a coat is crap!’ DollyGirl1 offered this advice: ‘My old school godmother taught me 60 years ago that if you have a bit of money you should ‘spend a little, save a little and give a little away’, which I still think is a great philosophy. I still live by it after all these years.’

But the final word must go to Gina from Hampshire. ‘In 1988 I coveted a £100 bottle of facial treatment, marketed as a dream come true to stop the years,’ she writes. ‘It was a sticky, pale pink iridescent liquid and I ‘had’ to have it.

‘My husband asked in disbelief: ‘You just spent £100 on a face lotion?’

‘I replied, ‘No. I’ve just saved £5,000 on a facelift!’

Do you agree with their advice and strategies? Let me know.