How much money do you need to retire in the UK?

Retirement savings by age

It’s hard to predict how much you’ll need in your pension to enjoy a comfortable retirement because everyone’s circumstances are different. But one rule is broadly true: the earlier you start paying into a pension, the more likely you’ll be able to afford a comfortable lifestyle.

This is because:

• the earlier you start your pension, the longer your pension has to grow; and
• the longer you pay into a pension, the less you need to pay in each month.

The following examples are calculated using PensionBee’s Pension Calculator.  They show how much you’d need to save each month to receive £20,000 per year during retirement, and assume: 

• your pension will last about 20 years;
• your employer contributes £150 per month; and
• you don’t claim any State Pension.

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Excluding the State Pension, how much do you need to save for ^{_isa_allowance} per year during retirement?

Including the State Pension, how much do you need to save for ^{_isa_allowance} per year during retirement?

Fortunately, most people earn more as they get older. So if you’ve started to pay into your pension a little later in life, you may be more able to afford to make larger contributions.

To read more about how these numbers are calculated, please visit the Pension Calculator FAQs.

Use our Pension Calculator to see how much you might need to save to afford your desired retirement lifestyle.

Please note that our Pension Calculator assumes several important factors including:

• 5% investment growth per year;
• a 2.5% rate of inflation;
• an annual management fee of 0.7%;
• a retirement age of 65; and
• includes the 25% tax relief automatically added by HMRC on personal contributions.

Pension Auto-Enrolment

As of October 2012, the UK government has required employers to enrol their employees into a workplace pension scheme. As part of the deal, employers are also required to make contributions. Auto-Enrolment has increased the number of people paying into their pension from a younger age.

How much do people spend in retirement?

A lot of things change when you retire, including your financial outgoings. Depending on your circumstances, you may stop paying for some things and start paying for others.

Pensions UK developed their Retirement Living Standards wto illustrate your potential retirement spending across three different income levels: minimum, moderate and comfortable.

The most report (2025/26) shows that single retirees would need:

• £13,400 a year for a minimum lifestyle;
• £31,700 a year for a moderate lifestyle; and
• £43,900 a year for a comfortable lifestyle.

For those in a couple, they would need:

• £21,600 a year for a minimum lifestyle;
• £43,900 a year for a moderate lifestyle; and
• £60,600 a year for a comfortable lifestyle.

At the minimum standard, retirees could expect to cover all of their needs, such as groceries (£55 per week), clothing (up to £450 per year) and housing. They’d also be able to enjoy a week and a long weekend in the UK every year, £20 on each friend or family member’s birthday present, and some DIY maintenance and redecorating one room a year. However, the budget leaves no room to run your own car.

At the moderate standard, retirees would see their grocery budget increase to £56 per week and their clothing budget increase to £1,548 per year. On top of this, they’d be able to enjoy two weeks in Europe as well as a long weekend in the UK every year. The budget for a moderate lifestyle would also allow for some help with maintenance and decorating each year, £30 on each birthday present. Plus the money to run a car and replace it every seven years.

At the comfortable standard, the budget for groceries increases to £75 a week and the budget for clothing is to £1,548 each year. At this level, retirees could enjoy a fortnight 4* holiday in the Med with spending money, and 3 long weekend breaks in the UK with £400 spending money, £50 on each birthday present and they’d be able to replace their car every three years.

Listen, watch or read the transcript of episode 11 of the Pension Confident Podcast and hear from Financial Journalist; Faith Archer, Head of Media Relations at Pensions UK; Mark Smith and Senior Engagement Manager; Priyal Kanabar as they discuss how to prepare for a happy retirement.

How long will you need your pension?

When you’re thinking about the kind of retirement lifestyle you’d like to lead, you’ll need to make sure your pension pot is large enough to carry you through to support you in retirement.

The average 65-year old can expect to live for another 20 years, according to the latest government data. However, many people live much longer.

Fortunately, there’s no limit to the number of years you can claim a State Pension. But at just over ^{_state_pension_annually} a year, for the full new State Pension (2025/26), you’ll need to top this up with other savings - such as a personal pension - if you want to cover more than essential costs.

How much do you need to retire?

No matter the type of lifestyle you want to lead when you retire, your options will be limited by the size of your pension pot. The larger the pot, the more it can pay out.

For example, assuming you start saving at 20, retire at 65 and live to 85:

• with a personal monthly contribution of £200 and a monthly employer contribution of £100, a £206,000 pot could pay out up to £20,000 per year for 20 years;
• with a personal monthly contribution of £430 and a monthly employer contribution of £100, a £376,000 pot could pay out up to £30,000 per year for 20 years; and
• with a personal monthly contribution of £670 and a monthly employer contribution of £100, a £575,000 pot could pay out up to £40,000 per year for 20 years.

It’s up to you how long you want to stretch out your pension to last; you could take out a larger amount for fewer years, a smaller amount over more years, or you could buy an annuity that pays out for the rest of your life.

Income drawdown

Taking out (drawing down) money from your pension in instalments is a common way to receive retirement income. The first ^{_corporation_tax} of withdrawals are fax-free. And any further pension withdrawals will be considered taxable income.

Pension annuity

You can use some or all of your pension pot to buy an insurance product called an annuity. In return, the insurance company pays out a regular income for the rest of your life.

There are many different types of annuities, but they all share some common traits:

• you’ll receive regular payments;
• they’re not linked to the stock market (unlike pensions); and
• income is taxable.

An annuity may be suitable for those who prefer the safety of a guaranteed income, and expect to live to (or beyond) the average life expectancy.

Other sources of income

A pension isn’t the only source of income you could rely on in retirement.

You may also receive money from:

• income from property rental;
• savings;
• royalties;
• other investments; and/or
• taking on part-time work.

You could also raise money by releasing equity in your home, though you’ll want to speak with a financial adviser before doing so. Whichever approach you take, deciding what to do with your pension is an important and personal decision. Sometimes circumstances can decide for you, but it’s generally a good idea to try to make your pension last as long as possible.

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How much can you save for retirement?

There’s no limit to the amount you can pay into your pension, however there is a limit on the amount you can pay tax-free. You’ll pay tax on any payments over this limit.

The annual pension contribution limit

The annual allowance is the limit on the gross amount that can be saved into a pension each tax year without incurring tax charges. The current standard annual allowance for pension contributions is ^{_annual_allowance} (2025/26) - this includes personal, employer and any third-party contributions.

This includes payments from:

• yourself;
• your employer;
• any third parties such as spouses or family members; and
• the government’s tax top up.

If you continue to contribute to your pension after you’ve started to take money out of it, your annual tax-free allowance will be reduced to ^{_money_purchase_annual_allowance} a year. This is known as the Money Purchase Annual Allowance (MPAA). Things are slightly different if you earn less than ^{_min_annual_pension_contribution} or more than £150,000 (see How much can I pay into a pension each year?).

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The pensions lifetime allowance

The pension lifetime allowance (LTA) was the total value that you could save across all of your pension pots without having to pay an extra tax charge.

The LTA was fully abolished on 6 April 2024 and was replaced with three different allowances:

• the lump sum allowance (LSA);
• the lump sum and death benefits allowance (LSDBA); and
• the overseas transfer allowance (OTA).

Read more about lump sum and death benefit allowances.

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Playing catch-up

If you’ve started paying into your pension a little later in life, or your pension pot isn’t as large as you’d like it to be, it may be worth making savings elsewhere to increase your contributions.

Combine your pensions with PensionBee

Knowing how much to save for retirement is simpler when all your old pensions are combined into one easy-to-manage plan.

After combining your pensions with PensionBee, you’ll be able to:

• use our Retirement Planner to see if you’re on track to meet your savings goal;
• adjust your contribution amount up or down to meet your goal; and
• flexibly withdraw from the tax-free portion of your pension from the age of 55 (rising to 57 from 2028).

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Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 29-01-2025