How Much Should I Save for Retirement If I’m Self-Employed in the UK?
If you're self-employed, working out how much you should save for retirement can be difficult. Unlike an employee, you don't have an employer making pension contributions for you, so the responsibility for building your retirement fund sits largely with you.
As a general starting point, saving around 12% of your gross income towards retirement can be a useful benchmark. But if you're starting later, you may need to save more.
The important thing to remember is that there isn't one figure that works for everyone.
PLEASE NOTE: Information for this article is accurate for the 2026/27 tax year.
How much should I put into my pension?
A commonly used rule of thumb is to save around 12% of your income for retirement if you're starting early.
Another well-known approach is the “half your age” rule. Take your age when you start saving and divide it by two to get a rough percentage of income to contribute.
For example:
Age 30 → around 15%
Age 40 → around 20%
Age 50 → around 25%
PLEASE NOTE: These are only guidelines. Someone aged 40 with £200,000 already saved into pensions will have very different needs from someone aged 40 who is only just starting.
Your existing pension savings, desired retirement age, expected retirement income and other assets all need to be considered.
The important thing is to review your retirement plan regularly rather than simply choosing a percentage and forgetting about it.
Don't forget your State Pension
Your State Pension can form an important part of your retirement income.
For 2026/27, the full new State Pension is £241.30 a week, or around £12,548 a year. However, you may not be entitled to the full amount. Your entitlement depends on your National Insurance record.
If you're self-employed, it's worth checking your State Pension forecast before deciding how much you need to save privately. This can help you understand how much income you could receive from the State Pension and whether there are gaps in your National Insurance record.
Your private pension then needs to provide the additional income required to achieve the retirement lifestyle you want.
What about a SIPP?
A Self-Invested Personal Pension (SIPP) is one option for self-employed people who want to build their retirement savings.
For the 2026/27 tax year, the standard pension annual allowance is £60,000. This isn't a target for how much you should contribute, but it's the standard limit on pension contributions that can receive tax advantages, subject to the relevant rules.
You may also be able to carry forward unused allowance from the previous three tax years.
For most people, personal pension contributions also benefit from tax relief.
For example, if you contribute £8,000, basic-rate tax relief can add another £2,000, giving your pension a total contribution of £10,000. Higher-rate taxpayers may be able to claim additional relief through Self Assessment, depending on their circumstances.
For self-employed professionals, this can make pension contributions a particularly tax-efficient way of building long-term retirement savings.
A real-world example
Consider a 40-year-old sole trader earning £50,000 a year.
Using a 12% guideline, they might aim to contribute:
£50,000 × 12% = £6,000 a year
That's £500 a month.
The “half your age” rule would suggest around 20%:
£50,000 × 20% = £10,000 a year
That's around £833 a month.
That's quite a difference, and it demonstrates why rules of thumb can only take you so far.
If this person already has a substantial pension, they may not need to contribute £833 a month. If they have very little saved and want to retire early, they may need to contribute even more.
The right figure depends on the individual.
The important thing to remember is that there isn't one figure that works for everyone.
What if my income changes?
This is particularly important if you're self-employed. Your income may vary considerably from year to year, so you don't necessarily have to make identical pension contributions every month.
You could combine regular monthly contributions with additional lump-sum payments in years when your business performs particularly well.
The important thing is to review your retirement plan regularly rather than simply choosing a percentage and forgetting about it.
Asking yourself: How much should I save for retirement If I’m self-employed in the UK? Culverhouse & Co can help
The simplest answer is: Start with around 12% of your income as a broad benchmark, but don't assume that's your personal target.
Your actual figure should take into account:
Your age and planned retirement date
Existing pension savings
State Pension entitlement
Your desired retirement income
Your business and other assets
Your tax position
How much you can realistically afford to contribute
At Culverhouse & Co, our Chartered Financial Planners and IFAs can help you look at your pensions, investments, State Pension and wider financial position to build a retirement plan around your circumstances.
If you're self-employed in Bromley, Orpington, Kent or the surrounding areas and want to understand whether you're saving enough for the retirement you want, get in touch for an initial consultation.
The information in this article is for general guidance only and is based on 2026/27 rules. Tax treatment depends on individual circumstances and may change. Pension and investment values can fall as well as rise, and you may get back less than you invest. This article does not constitute personal financial advice.
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