At a glance

  • According to Which?, an annual income of about £25,000 for couples or £19,000 for individuals can give you a ‘comfortable’ lifestyle in retirement
  • For couples, that means saving £276 a month if you’re 30 and have no pension savings so far
  • This rises to £384 a month for couples if you’re 40 and have nothing in your pension so far, and £647 a month if you’re 50

At a glance

  • According to Which?, an annual income of about £25,000 for couples or £19,000 for individuals can give you a ‘comfortable’ lifestyle in retirement
  • For couples, that means saving £276 a month if you’re 30 and have no pension savings so far
  • This rises to £384 a month for couples if you’re 40 and have nothing in your pension so far, and £647 a month if you’re 50

At a glance

  • According to Which?, an annual income of about £25,000 for couples or £19,000 for individuals can give you a ‘comfortable’ lifestyle in retirement
  • For couples, that means saving £276 a month if you’re 30 and have no pension savings so far
  • This rises to £384 a month for couples if you’re 40 and have nothing in your pension so far, and £647 a month if you’re 50

If you have no idea how much you need to save for your retirement, you’re not alone. According to the PLSA/Loughborough University Retirement Living Standards, as many as 77% of people in the UK don’t know either1. But one thing’s for sure: it’s unlikely that the state pension you receive from the government will be enough to live on by itself, which means you need to take responsibility for supplementing that income with your own savings.

So, if you’re thinking about how to plan for retirement, when to start saving and how much to save, here are the most important things to consider:

How long will you need your pension income for?

The first thing to think about is when you’re likely to retire and how long you’re likely to live for, so you can have an idea of how many years your pension savings will need to last. Obviously, this is impossible to predict, but here are some facts that will give you a reasonable indication:

  • The average life expectancy at birth in the UK is just over 79 years for males and just over 83 for females, while one in five boys and one in three girls can expect to live to at least 90, according to an ONS statistical bulletin.2

  • The same ONS bulletin also reported that people who’ve already made it to 65 can look forward, on average, to nearly another 19 years if they’re male and just over another 21 years if they’re female, taking them well into their 80s.

So if you’re planning on retiring in your mid to late 60s, it’s reasonable to expect that you’ll need your pension income to last for at least 20 years – and of course, if you want to retire early, you’ll need more, especially since you won’t be eligible for the state pension until you’re at least 67 (from 2028 onwards).

How much will you need on top of the state pension?

The best place to start is to work out what kind of lifestyle you’ll be hoping to lead, assuming you stay well, and how much money you’ll need to pay for that. Obviously, for a precise amount you’ll need to do your own calculations, but there is research out there that will give you a ballpark figure to work from.

According to the consumers’ association Which?, which recently surveyed 6,300 retired and semi-retired members3, the numbers are as follows:

  • A retired couple living a ‘comfortable’ lifestyle will spend about £25,000 (£19,000 for individuals) a year for basics and for luxuries such as eating out, European holidays and hobbies

  • A more ‘luxurious’ lifestyle, that might include long-haul holidays and a new car every five years, would cost £40,000 a year for couples (£30,000 for individuals)

This research is borne out by the PLSA1, which calculated:

  • A retired couple with an annual income of £29,100 would be able to afford all the basics, have one foreign holiday per year and eat out a few times a month

How much will you need in your pension pot?

Before you start working it out, don’t forget that you can factor in the state pension you’ll receive, which will make a substantial contribution towards your income needs. Here are the calculations that Which? has done3, based on a couple living together and having a defined contribution pension:

  • A couple can expect their state pension to be around £14,000 a year (and this is likely to increase by at least the rate of inflation)

  • So for that ‘comfortable’ post-tax income of £25,000 a year, you’ll need to generate your own income of £11,000 a year

  • That means having a pension pot of £262,500 if you opt to have the income paid via an annuity (that is, where you use your pension pot to buy a guaranteed income). Or it would drop to £169,175 to get the same amount from income drawdown, which is when you keep your money invested and you withdraw a regular income from it (and this is assuming your savings grow by 3% annually)

  • For the more ‘luxurious’ lifestyle, you’ll need an income of £26,000 on top of your state pension

  • That will require a pension pot of £718,300 if you go for an annuity or £456,500 if you go for income drawdown

So how much do you need to save every month?

This will depend on how old you are now and how much you’ve paid into a pension scheme already (if anything). But, again, Which? has worked out some ballpark figures3 for couples to help give you an idea (based on you choosing the income drawdown option):

  • 30-year-olds with no pension savings so far: £276 a month for the ‘comfortable’ lifestyle and £741 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £73 and £507 respectively)

  • 40-year-olds with no pension savings so far: £384 a month for the ‘comfortable’ lifestyle and £1,030 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £133 and £742 respectively)

  • 50-year-olds with no pension savings so far: £647 a month for the ‘comfortable’ lifestyle and £1,735 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £278 and £1,311 respectively)

(These figures are based on receiving 20% tax relief on your pension contributions and an assumption that your pension pot will grow by 3% per year after charges.)

What should you do now?

Whether these figures scare you, or make you feel comfortable that you’re on track for the retirement you want, it’s important to remember that everyone’s circumstances are different and therefore it’s always helpful to seek advice from an expert.

A good financial adviser will take the time to assess your retirement goals – such as what age you’d like to retire and what kind of lifestyle you’d like to lead – then examine your current finances and work out a realistic plan that will help to get you there.

 

These figures are for illustrative purposes only and based on Which? calculations

The value of an investment with St. James’s Place may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

If you have no idea how much you need to save for your retirement, you’re not alone. According to the PLSA/Loughborough University Retirement Living Standards, as many as 77% of people in the UK don’t know either1. But one thing’s for sure: it’s unlikely that the state pension you receive from the government will be enough to live on by itself, which means you need to take responsibility for supplementing that income with your own savings.

So, if you’re thinking about how to plan for retirement, when to start saving and how much to save, here are the most important things to consider:

How long will you need your pension income for?

The first thing to think about is when you’re likely to retire and how long you’re likely to live for, so you can have an idea of how many years your pension savings will need to last. Obviously, this is impossible to predict, but here are some facts that will give you a reasonable indication:

  • The average life expectancy at birth in the UK is just over 79 years for males and just over 83 for females, while one in five boys and one in three girls can expect to live to at least 90, according to an ONS statistical bulletin.2

  • The same ONS bulletin also reported that people who’ve already made it to 65 can look forward, on average, to nearly another 19 years if they’re male and just over another 21 years if they’re female, taking them well into their 80s.

So if you’re planning on retiring in your mid to late 60s, it’s reasonable to expect that you’ll need your pension income to last for at least 20 years – and of course, if you want to retire early, you’ll need more, especially since you won’t be eligible for the state pension until you’re at least 67 (from 2028 onwards).

How much will you need on top of the state pension?

The best place to start is to work out what kind of lifestyle you’ll be hoping to lead, assuming you stay well, and how much money you’ll need to pay for that. Obviously, for a precise amount you’ll need to do your own calculations, but there is research out there that will give you a ballpark figure to work from.

According to the consumers’ association Which?, which recently surveyed 6,300 retired and semi-retired members3, the numbers are as follows:

  • A retired couple living a ‘comfortable’ lifestyle will spend about £25,000 (£19,000 for individuals) a year for basics and for luxuries such as eating out, European holidays and hobbies

  • A more ‘luxurious’ lifestyle, that might include long-haul holidays and a new car every five years, would cost £40,000 a year for couples (£30,000 for individuals)

This research is borne out by the PLSA1, which calculated:

  • A retired couple with an annual income of £29,100 would be able to afford all the basics, have one foreign holiday per year and eat out a few times a month

How much will you need in your pension pot?

Before you start working it out, don’t forget that you can factor in the state pension you’ll receive, which will make a substantial contribution towards your income needs. Here are the calculations that Which? has done3, based on a couple living together and having a defined contribution pension:

  • A couple can expect their state pension to be around £14,000 a year (and this is likely to increase by at least the rate of inflation)

  • So for that ‘comfortable’ post-tax income of £25,000 a year, you’ll need to generate your own income of £11,000 a year

  • That means having a pension pot of £262,500 if you opt to have the income paid via an annuity (that is, where you use your pension pot to buy a guaranteed income). Or it would drop to £169,175 to get the same amount from income drawdown, which is when you keep your money invested and you withdraw a regular income from it (and this is assuming your savings grow by 3% annually)

  • For the more ‘luxurious’ lifestyle, you’ll need an income of £26,000 on top of your state pension

  • That will require a pension pot of £718,300 if you go for an annuity or £456,500 if you go for income drawdown

So how much do you need to save every month?

This will depend on how old you are now and how much you’ve paid into a pension scheme already (if anything). But, again, Which? has worked out some ballpark figures3 for couples to help give you an idea (based on you choosing the income drawdown option):

  • 30-year-olds with no pension savings so far: £276 a month for the ‘comfortable’ lifestyle and £741 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £73 and £507 respectively)

  • 40-year-olds with no pension savings so far: £384 a month for the ‘comfortable’ lifestyle and £1,030 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £133 and £742 respectively)

  • 50-year-olds with no pension savings so far: £647 a month for the ‘comfortable’ lifestyle and £1,735 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £278 and £1,311 respectively)

(These figures are based on receiving 20% tax relief on your pension contributions and an assumption that your pension pot will grow by 3% per year after charges.)

What should you do now?

Whether these figures scare you, or make you feel comfortable that you’re on track for the retirement you want, it’s important to remember that everyone’s circumstances are different and therefore it’s always helpful to seek advice from an expert.

A good financial adviser will take the time to assess your retirement goals – such as what age you’d like to retire and what kind of lifestyle you’d like to lead – then examine your current finances and work out a realistic plan that will help to get you there.

 

These figures are for illustrative purposes only and based on Which? calculations

The value of an investment with St. James’s Place may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

If you have no idea how much you need to save for your retirement, you’re not alone. According to the PLSA/Loughborough University Retirement Living Standards, as many as 77% of people in the UK don’t know either1. But one thing’s for sure: it’s unlikely that the state pension you receive from the government will be enough to live on by itself, which means you need to take responsibility for supplementing that income with your own savings.

So, if you’re thinking about how to plan for retirement, when to start saving and how much to save, here are the most important things to consider:

How long will you need your pension income for?

The first thing to think about is when you’re likely to retire and how long you’re likely to live for, so you can have an idea of how many years your pension savings will need to last. Obviously, this is impossible to predict, but here are some facts that will give you a reasonable indication:

  • The average life expectancy at birth in the UK is just over 79 years for males and just over 83 for females, while one in five boys and one in three girls can expect to live to at least 90, according to an ONS statistical bulletin.2

  • The same ONS bulletin also reported that people who’ve already made it to 65 can look forward, on average, to nearly another 19 years if they’re male and just over another 21 years if they’re female, taking them well into their 80s.

So if you’re planning on retiring in your mid to late 60s, it’s reasonable to expect that you’ll need your pension income to last for at least 20 years – and of course, if you want to retire early, you’ll need more, especially since you won’t be eligible for the state pension until you’re at least 67 (from 2028 onwards).

How much will you need on top of the state pension?

The best place to start is to work out what kind of lifestyle you’ll be hoping to lead, assuming you stay well, and how much money you’ll need to pay for that. Obviously, for a precise amount you’ll need to do your own calculations, but there is research out there that will give you a ballpark figure to work from.

According to the consumers’ association Which?, which recently surveyed 6,300 retired and semi-retired members3, the numbers are as follows:

  • A retired couple living a ‘comfortable’ lifestyle will spend about £25,000 (£19,000 for individuals) a year for basics and for luxuries such as eating out, European holidays and hobbies

  • A more ‘luxurious’ lifestyle, that might include long-haul holidays and a new car every five years, would cost £40,000 a year for couples (£30,000 for individuals)

This research is borne out by the PLSA1, which calculated:

  • A retired couple with an annual income of £29,100 would be able to afford all the basics, have one foreign holiday per year and eat out a few times a month

How much will you need in your pension pot?

Before you start working it out, don’t forget that you can factor in the state pension you’ll receive, which will make a substantial contribution towards your income needs. Here are the calculations that Which? has done3, based on a couple living together and having a defined contribution pension:

  • A couple can expect their state pension to be around £14,000 a year (and this is likely to increase by at least the rate of inflation)

  • So for that ‘comfortable’ post-tax income of £25,000 a year, you’ll need to generate your own income of £11,000 a year

  • That means having a pension pot of £262,500 if you opt to have the income paid via an annuity (that is, where you use your pension pot to buy a guaranteed income). Or it would drop to £169,175 to get the same amount from income drawdown, which is when you keep your money invested and you withdraw a regular income from it (and this is assuming your savings grow by 3% annually)

  • For the more ‘luxurious’ lifestyle, you’ll need an income of £26,000 on top of your state pension

  • That will require a pension pot of £718,300 if you go for an annuity or £456,500 if you go for income drawdown

So how much do you need to save every month?

This will depend on how old you are now and how much you’ve paid into a pension scheme already (if anything). But, again, Which? has worked out some ballpark figures3 for couples to help give you an idea (based on you choosing the income drawdown option):

  • 30-year-olds with no pension savings so far: £276 a month for the ‘comfortable’ lifestyle and £741 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £73 and £507 respectively)

  • 40-year-olds with no pension savings so far: £384 a month for the ‘comfortable’ lifestyle and £1,030 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £133 and £742 respectively)

  • 50-year-olds with no pension savings so far: £647 a month for the ‘comfortable’ lifestyle and £1,735 for ‘luxurious’ (or if you already have £100,000 in your pot, it’s £278 and £1,311 respectively)

(These figures are based on receiving 20% tax relief on your pension contributions and an assumption that your pension pot will grow by 3% per year after charges.)

What should you do now?

Whether these figures scare you, or make you feel comfortable that you’re on track for the retirement you want, it’s important to remember that everyone’s circumstances are different and therefore it’s always helpful to seek advice from an expert.

A good financial adviser will take the time to assess your retirement goals – such as what age you’d like to retire and what kind of lifestyle you’d like to lead – then examine your current finances and work out a realistic plan that will help to get you there.

 

These figures are for illustrative purposes only and based on Which? calculations

The value of an investment with St. James’s Place may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

 

References

1. The PLSA/Loughborough University Retirement Living Standards, 2019 (Based on 26 qualitative discussion groups across 13 UK locations, with almost 250 participants from a wide range of socioeconomic and geographic backgrounds.)

2. ONS, 'National life tables – life expectancy in the UK: 2017 to 2019', September 2020

3. Which?, 'How much will you need to retire?', November 2020 (based on responses from 6,300 retired and semi-retired couples Which? members in April 2020)

Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by us or St. James's Place. Please note that clicking a link will open the external website in a new window or tab.

 

References

1. The PLSA/Loughborough University Retirement Living Standards, 2019 (Based on 26 qualitative discussion groups across 13 UK locations, with almost 250 participants from a wide range of socioeconomic and geographic backgrounds.)

2. ONS, 'National life tables – life expectancy in the UK: 2017 to 2019', September 2020

3. Which?, 'How much will you need to retire?', November 2020 (based on responses from 6,300 retired and semi-retired couples Which? members in April 2020)

Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by us or St. James's Place. Please note that clicking a link will open the external website in a new window or tab.

 

References

1. The PLSA/Loughborough University Retirement Living Standards, 2019 (Based on 26 qualitative discussion groups across 13 UK locations, with almost 250 participants from a wide range of socioeconomic and geographic backgrounds.)

2. ONS, 'National life tables – life expectancy in the UK: 2017 to 2019', September 2020

3. Which?, 'How much will you need to retire?', November 2020 (based on responses from 6,300 retired and semi-retired couples Which? members in April 2020)

Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by us or St. James's Place. Please note that clicking a link will open the external website in a new window or tab.

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