You now need £48,000 a YEAR for a ‘comfortable’ retirement. Here’s how to get there

Workers saving for their retirement may not have had to deal with the attack on their pensions by Chancellor Rachel Reeves that many feared.

But her budget was still packed with policies and details that showed retirement savings could become more difficult.

Here’s how budgeting can impact your retirement savings – and what you can do now to build a golden retirement.

1. Start saving as early as possible

Pensioners will need an income of up to £48,161 to afford a ‘comfortable’ pension by 2030, according to an analysis of figures from the Office for Budget Responsibility, published alongside the Budget.

According to the Pensions and Lifetime Savings Association (PLSA), a comfortable pension currently costs £43,100 for a single person. This includes eating out, treating loved ones, and the occasional vacation.

But pensioners will need a further £5,000 a year to achieve this standard of living by 2030, inflation figures from the OBR report show.

Some of this annual amount should be covered by the state pension, but the PLSA figures assume you own your home outright.

Such an income may be out of reach for the majority of retirees. But it’s worth saving for retirement as early as possible and contributing as much as your budget allows.

For example, someone who started paying 5% of a £25,000 salary into their pension at the age of 22 would have a pension fund of £434,000 by the age of 66, according to investment platform Fidelity.

This assumes that their employer also pays 3 percent. contributions, which is the minimum they are required to pay under the occupational pension auto-enrolment rules.

But if the same worker waited until age 27 to start contributing, he would have a pension pot worth £380,000 at age 66 – £54,000 less than if he had started saving earlier.

2. Use duty-free wrappers

Experts feared the Chancellor would make pensions or Isas less generous, but she gave both a stay of execution.

However, you don’t know what to expect, so it is wise to take advantage of the rights that are available to you now.

Pensions could be subject to inheritance tax from 2027 if left to loved ones, under measures announced in the Budget. But they keep the rest of their benefits.

This means that any money put into your pension is eligible for tax relief, subject to generous annual and lifetime allowances. If you save for a company pension, you will also receive contributions from your employer.

Many employers match employee contributions. That means that if you’re a higher rate taxpayer, for example, for every £60 you put into your pension, the government will increase it to £100. If your employer matches your contributions, you will receive €200 in pension if you contribute €60.

The Chancellor increased capital gains tax on investment profits on Wednesday. The new higher levels took effect overnight.

A basic rate taxpayer who makes more than £3,000 profit when he sells shares will now receive 18pc. Paying CGT, an increase from 10pc.

Higher-rate taxpayers will see their capital gains tax rate rise from 20pc to 20pc. to 24 pc.

That means pensions and Isas, which let you grow your money without tax on interest, capital gains or dividends, are more valuable than ever.

Jason Hollands, managing director at asset manager Evelyn Partners, says higher CGT rates mean everyone needs to focus on using Isa and pension packaging to save.

‘Taking advantage of tax-free wraps is particularly important if you are married or in a civil partnership and can take advantage of both types of benefits and transfer savings and investments so that they do not incur unnecessary tax liabilities,’ he adds.

3. Inquire about salary sacrifice

Some employers offer a scheme that allows employees to increase their pension at no extra cost to themselves or their employer.

Employees agree to a reduction in their salary equal to the amount they have paid into their pension. In return, their employer pays the employee’s total pension contributions.

The benefit is that, as the employee sacrifices part of their salary, both they and the employee pay less NI contributions – and the employee also pays less income tax.

These savings can then be used to increase the employee’s pension. For an employee, it means free, extra money in your pension.

Some experts had feared that the Chancellor would crack down on this generous benefit, but that will happen again. Still, it is wise to take advantage of it while you can.

Myron Jobson, senior personal finance analyst at DIY investing platform Interactive Investor, points out that salary sacrifice can be a useful way to make your overall income appear lower.

This may mean that you qualify for benefits that are only available to people with incomes below certain thresholds.

For example, families lose their right to child benefit if one parent earns more than £60,000.

In some cases, employees in this position who are just above this maximum can reduce their salary below it.

4. Give help to your children

Children also have generous tax-free allowances that can boost their savings.

For example, you can pay up to £9,000 a year into a child’s Junior Isa, where the money can grow tax-free.

Alternatively, you can pay up to £2,880 in pension for them each tax year, which the government will top up up to £3,600.

The power of compound interest means that the money saved for children can grow astronomically by the time they have access to it in retirement.

For example, if you put the maximum amount of €2,880 into a baby’s pension at birth, it would be worth almost €72,000 by the time they could access it at age 60 – even if they never had it added a cent.