A single person now requires a pension pot of over £690,000 in order to achieve a “comfortable” retirement, according to a new analysis.
Wealth management company Quilter carried out the research following an update to the Pensions UK Retirement Living Standards, which have been refreshed to reflect rising costs across everyday essentials, social activities and hobbies.
A single person now requires a pension of £691,000 to achieve a comfortable lifestyle in retirement, Quilter suggests, although a “minimum standard” can be met with the state pension alone, with only limited additional savings required. A “moderate” lifestyle would require £413,000.
The Retirement Living Standards define the level of income needed to achieve minimum, moderate and comfortable lifestyles in retirement. Quilter says the calculations determine the pension pot required to generate these incomes, based on a 6.1% escalating annuity rate for a 66-year-old, assuming no housing costs in retirement.
For couples, the cost is lower per person due to shared expenses – but still requires substantial savings. To reach a comfortable standard of living, each partner would need a pension of £389,000, while a moderate lifestyle would require £208,000 each.
Jon Greer, head of retirement policy at Quilter, said: “With the annual cost of achieving a comfortable lifestyle in retirement on the rise, the pension pot required to afford it has now reached £691,000. The state pension still forms a crucial foundation and goes a long way towards helping people achieve a minimum standard of living, however stepping up to a moderate or comfortable lifestyle requires significant pension savings.
“While most people are on track to cover the basics, far fewer are likely to achieve the level of flexibility and financial security many would aspire to.
“These figures also assume people are mortgage-free, which will become less common for future generations who are taking out much larger mortgages with far longer terms. Factoring in housing costs could push the required income higher still, making early planning and regular reviews even more important.
“The current policy landscape, including pensions becoming subject to inheritance tax from April 2027, changes to salary sacrifice, and the never-ending threat of further pension tax changes at each budget, have made things increasingly confusing for savers.
“This may make pensions seem less attractive, but pensions should still be viewed as an incredibly efficient way to save for retirement and these figures bring into sharp focus just how important it is that people take ownership of their savings.”
| Retirement level | Annual expenditure | State pension | Income needed from pot (gross) | Pot required (6.1% escalating annuity) |
| Comfortable | £45,400 | £12,548 | £42,172 | £691,000 |
| Moderate | £32,700 | £12,548 | £25,184 | £413,000 |
| Minimum | £13,900 | £12,548 | £1,684 | £28,000 |
Source: Quilter
For a couple, the new joint pension amounts are:
| Retirement level | Annual expenditure | State pension (combined) | Income needed from combined pots (gross) | Pot required per person (6.1% escalating annuity) | Combined pot required |
| Comfortable | £62,700 | £25,096 | £47,444 | £389,000 | £778,000 |
| Moderate | £45,400 | £25,096 | £25,368 | £208,000 | £416,000 |
| Minimum | £22,500 | £25,096 | £- | £- | £- |
Source: Quilter
