Here's how much you need to be saving if you want to be a pension millionaire

 
Josh Mines
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Hargreaves Lansdown has revealed how much you should be saving a month to be a pension millionaire (Source: Getty)

Hargreaves Lansdown has today released a study into what savers should be looking to do to have a million saved up for their retirement.

Though a pot of a million sounds like a distant dream for many people, the broker advised to save early and play it safe on investments to build the pot up over time.

Being a "pension millionaire" may sound impressive, but the analysis also showed that its far from a life of luxury.

A pensioner with £1m saved when they retire at 68 would yield a yearly income of around £40,000.

The analysis looked at data from 1,500 pension millionaires, and calculated about how much you needed to put away per month to become a pension millionaire.

Read more: Want to be a pension millionaire? Here's when you can stop saving

Hargreaves Lansdown estimated how much you'd need to put in a pension pot with certain investment returns to retire with £1m at 68:

Cost of monthly contribution Investment return
£1,200 five per cent
£890 six per cent
£655 seven per cent
£480 eight per cent

Those who had built up a million pound pension also preferred to invest in the stock market, with direct shares accounting for half of assets invested. The other half was usually invested through funds.

Pension millionaires were also found to typically invest in large blue chip stocks in their pension both pre and post retirement.

The top 10 shares pension millionaires go for include:

Pre-retirement In-drawdown
Aviva Aviva
BP BP
GlaxoSmithKline GlaxoSmithKline
HSBC Holdings HSBC Holdings
Lloyds Banking Group Legal & General Group
National Grid Lloyds Banking Group
Royal Dutch Shell National Grid
Tesco Royal Dutch Shell
Unilever Unilever
Vodafone Vodafone

Nathan Long, senior pension analyst at Hargreaves Lansdown, said:

Building a million pound pension may not guarantee a lifestyle of luxury yachts and fast cars, but it will offer freedom and flexibility through your final working days and the possibility to cascade savings down to the next generation.

Hargreaves Lansdown research shows pension millionaires are not big risk takers when it comes to investing their money, instead favouring tried and tested approaches.

Becoming a pension millionaire may not be possible for everybody, but taking hold of the investment reins can provide the chance for a bigger retirement income, greater flexibility when leaving the workforce, or both.

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