So how much do you need to retire? We all want to live a comfortable retirement but how can you achieve this in the UK. We explore UK retirement standards to reach your ideal retirement lifestyle.

Key takeaways

• A Single person needs an average retirement income of £43,100 per year for a comfortable retirement, whilst a couple needs at least £59,000
• The State Pension currently stands at £230.24 at week, amounting to £11,973 per annum
• A financial planner can assist you with retirement planning to help you reach your ideal retirement lifestyle

How much do I need to retire in the UK?

They say that for a moderate lifestyle in retirement a single person might need around £31,300 per year, while a couple would need at least £43,100. This figure is even higher if you wish for a comfortable retirement, with £43,100 per year for a single person and £59,000 for a couple.

The full state pension for this tax year (2025/26) stands at £230.25 per week or £11,973 per annum. This is a useful foundation for retirement planning and provides peace of mind, because this pension income generally rises each year.

However, will your state pension income be enough to live on? Well in some cases it could be, however it may not be enough if you want a moderate or comfortable lifestyle in retirement. This is why retirement planning is key and the sooner you start planning, the more likely your retirement plans will materialise.

Retirement planning is a journey, and it is important you have a roadmap to stay on track. How much you will need in retirement will depend on many factors, such as your lifestyle, expenses, goals and most importantly the age you plan to retire.

What are the key factors to consider when determining how much you need to retire comfortably?

Estimate your annual expenses in retirement

Start by calculating how much you spend each year or month, considering:

• Housing costs
• Food costs
• Transportation costs
• Health care
• Insurance costs
• Entertainment and hobbies
• Travel and holidays
• Gifts / memberships / subscriptions

Account for inflation

You may be retiring in 20-30 years’ time or more, but the price of goods and services is very likely to go up! Rising inflation means your annual costs are likely to increase. The purchasing power of money will diminish as inflation rises.

Historically inflation has averaged between 2-3% in the UK, but there have been occasions when it has been much higher than this. You should plan for your expenditure to increase even if you think your lifestyle with stay unchanged.

Retirement income sources in the UK

You will need to consider the income you will have in retirement, such as:

State pension income– have you applied for a forecast? Do you have any national insurance gaps?

Workplace pension Schemes– These are often mandatory arrangements if you are employed and meet certain income requirements. Some employers match pension contributions. The minimum contribution for auto-enrolment is 8% of your salary (including employer contributions)

Private Pensions (Personal Pensions)-You can also invest in a private pension scheme, which can include SIPPs (Self-Invested Personal Pensions) or regular pensions.

ISAs (Individual Savings Accounts) While ISAs do not have the same tax advantages as pensions, they allow you to save tax free which can be helpful in retirement.

Other savings or investments This can include Bonds, savings accounts and stocks and shares. You may also have a property which you could sell or draw income from in retirement.

Alter for your retirement goals

If you want to retire earlier than expected, you are going to need more money because you will be covering a longer period of time.

If you live for longer than expected, perhaps in your 90s and beyond you will need a large cushion to maintain your standard of living.

Many retirees have plans to travel or live in more luxury in retirement, but this will require more savings.

What will be the tax position on your retirement income

You will need to account for the tax on your retirement income, especially if you withdraw from pensions or savings.

State pension this is taxed if it exceeds your personal allowance of £12,570 (2025/26)

Private pensions you can currently draw 25% as tax free cash, but the remainder will be taxed as income when you draw it.

Savings Accounts Interest earned may be taxable, depending on your total income and personal savings allowance

ISAs Income and Capital Gains from ISAs are tax free

Final considerations

How much you need for retirement depends on your personal lifestyle goals. The key to reaching them begins with reviewing your retirement plans and regularly checking in to ensure you are on track, especially if your circumstances change. Financial advisers can give you support on understanding your retirement income and putting a plan tailored to your goals in place.

Consult a Financial Planner, who can help you build a robust retirement plan and maximise your retirement savings.

If you’re wondering how much you need to retire, we’re here to help.

Contact us on 0330 320 9280, email info@cravenstreetwealth.com or complete our online enquiry form for practical advice tailored to your own circumstances and needs.

 

Sources:

Fidelity: Triple Lock: what will the State Pension be in the future? https://www.fidelity.co.uk/markets-insights/personal-finance/personal-finance/triple-lock-what-will-the-state-pension-be-in-the-future/#:~:text=The%20full%20State%20Pension%20has%20been%20set,risen%20more%20than%2024%%20in%20three%20years.

BBC News: Pension income needed to retire jumps as family costs rise https://www.bbc.co.uk/news/business-68222807

 

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice. References to legislation and tax is based on our understanding of United Kingdom law and HM Revenue & Customs practice at the date of publication. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments. You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.

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