How Much Do I Need To Retire On?

May 21, 2025

How Much Do I Need to Retire On in the UK?

Planning for retirement is a significant financial step, and understanding how much you’ll need is crucial. The amount varies based on your desired lifestyle, living arrangements, and other personal factors.

Estimating Your Retirement Needs

We often tend to look at this firstly from the ‘what are your financial requirements’ perspective rather than talk about a desired pot size. Once this is established, we will create a cash flow model of your retirement plan and show you where any improvements can be made.

Understanding Retirement Lifestyles

The Pensions and Lifetime Savings Association (PLSA) provides benchmarks to help individuals gauge the income needed for different retirement lifestyles:

  • Minimum: Covers basic needs with some left over for occasional leisure activities.
    • Single: £14,400 per year
    • Couple: £22,400 per year
  • Moderate: Provides more financial security and flexibility, including modest holidays and dining out.
    • Single: £31,300 per year
    • Couple: £43,100 per year
  • Comfortable: Allows for more luxuries, such as extended travel and regular leisure activities.
    • Single: £43,100 per year
    • Couple: £59,000 per year

These figures assume retirees are mortgage- and rent-free and exclude potential care costs.

The Role of the State Pension

The UK State Pension serves as a foundational income for many retirees. For the 2025/26 tax year, the full new State Pension is £230.25 per week, amounting to approximately £11,973 annually. Eligibility and the exact amount you receive depend on your National Insurance record.

Additional Considerations

  • Housing: Will you own your home outright, or will you have rent or mortgage payments?
  • Healthcare: While the NHS covers many services, consider potential costs for private treatments or long-term care.
  • Inflation: Ensure your retirement plan accounts for the rising cost of living over time.

Taking the Next Steps

To get a clearer picture of your retirement needs, please get in touch. One of our advisers will be able to assist in creating a clear financial plan.

Remember, the earlier you start planning and saving for retirement, the more flexibility and security you’ll have in your later years.