By 2031 a quarter of the UK population will be pensioners say analysts. We're also living longer, which means having enough money to live on comfortably during retirement is going to be a challenge we all have to face.

Having enough money when you retire will require careful planning. Last year we challenged 26 households (made up of couples and single people) from all over the UK to live their lives for one week on the amount they would have to spend were they to rely on the state pension. The results were startling:

• Having started the experiment on Thursday, all but one of the households had used their entire weekly pension allowance by the time they sat down for Sunday lunch
• 28% of average spending went on drink, tobacco, newspapers, leisure activities and gambling
• The highest overspend was £327.18
• The lowest overspend was £0.54
• Only one household lasted the entire week on their pension with £4.36 remaining

The basic state single pension is £87.30 a week for the 2007/08 tax year. Some people may find this is barely enough to pay for food and bills let alone foreign travel, birthday and Christmas presents and all those little extras that make life enjoyable.

If you would like to enjoy a similar standard of living in retirement as you do now, you will need to plan for it. A pension plan is one way of helping you do this, and generally, the earlier you start making contributions, the better.

Choosing a pension is one of the most important financial decisions you will make in your life and there are several types of pension which may be available to you. These include:

State retirement pension: The basic state retirement pension is a flat-rate pension paid to anyone who has enough national insurance contributions or credits when they reach state retirement age.

Occupational pension: Occupational pension schemes are set up by employers to provide pensions and life assurance benefits for employees, for example, a tax-free lump sum payable to their dependant(s) if the employee dies before retirement.

There are two main types of occupational pension scheme:

• final salary, in which the pension is a proportion of your salary at or near retirement date and is linked to the number of years you have worked for the particular employer; or
• money purchase, in which the pension is based on the total value on retirement of the money paid into the scheme and on how the investment has performed.

As an employee you have the right to leave, or decline to join, an occupational pension scheme. If you are thinking about leaving an occupational pension scheme, you should consider the implications of this very carefully, because an occupational pension scheme will usually be far more advantageous than a personal pension scheme. In addition, an occupational pension scheme may be reluctant to allow you to return to the scheme after you have left to take out a personal pension. If you decide to leave, or decline to join, an occupational pension scheme, you will then need to contribute to a personal pension.

If you are thinking about leaving an occupational personal pension scheme, you must seek independent financial advice first.

Personal pension: Pensions generally give you a lot of flexibility about when you retire. However, there are some constraints worth considering. To take out a personal pension, you must be aged between 18 and the latest you can usually draw your personal pension is your 75th birthday. Tax rules mean from 2010 the earliest you can draw a private pension is your 55th birthday

Stakeholder pension: For some people a stakeholder pension may be a better option than other personal pensions. Stakeholder pensions offer greater flexibility than other personal pensions, for example, you can stop paying into the scheme without having to pay a penalty and restart whenever you wish. You may also be able to vary the timing and amount of your payments. You can even start paying into a stakeholder pension on behalf of a child.

For further information on pensions you might want to check out the Financial Service Authority's website at www.moneymadeclear.fsa.gov.uk/products_explained/pensions.html.

Alternatively, to find an independent financial adviser in your area go to www.unbiased.co.uk.