How much do I need to retire comfortably?

It's probably the most common question we hear from clients, and one of the hardest to answer in a single sentence. The honest reply is that it depends on the life you want to lead, where you live, what you owe, and what you already have. But that doesn't mean you can't get a useful estimate. With a few realistic numbers and a clear method, most people can work out roughly what they'll need.

Start with the lifestyle, not the lump sum

It's tempting to start with a target pot — "I want a million pounds" — but that's the wrong end of the telescope. A better question is: what does your life cost when you stop working? Most retirement plans start by mapping out monthly expenditure: housing, bills, food, transport, holidays, hobbies, gifts, the occasional unexpected expense. Once you have an annual figure, you can work backwards to the income you'll need.

The Pensions and Lifetime Savings Association (PLSA), working with Loughborough University, publishes the Retirement Living Standards each year. They're a useful starting point for orienting yourself, even though they're national averages and your own number may differ.

The PLSA standards

The PLSA describes three retirement lifestyles — Minimum, Moderate, and Comfortable — based on what people actually spend. The most recent figures (2025, after tax, excluding rent or mortgage) are:

• Minimum: £13,400 a year for a one-person household, £21,600 for a two-person household. Covers basics, one week's UK holiday, but no car.
• Moderate: £31,300 a year for one person, £43,900 for a couple. Includes a small car, a two-week European holiday, and more flexibility on food and clothes.
• Comfortable: £43,900 a year for one person, £60,600 for a couple. Includes longer holidays, more eating out, and a regular budget for replacing white goods or redoing a kitchen.

These are figures for households outside London, where costs are typically £1,300–£3,200 a year higher. The Loughborough/PLSA research is published openly at retirementlivingstandards.org.uk.

Where the State Pension fits in

The full new State Pension is £241.30 a week — £12,548 a year — in 2026/27, paid from State Pension age (currently 66, rising to 67 between April 2026 and April 2028). For a two-person household where both partners qualify for the full new State Pension, that's a combined £25,096 — which already covers the PLSA Minimum standard for a couple.

For everything beyond Minimum, you'll need private income. That's where workplace pensions, personal pensions, ISAs and other savings come in. You can normally access a workplace or personal pension from age 55, rising to 57 from 6 April 2028. You can't usually take pension money before that without a tax penalty, so anything you want to spend earlier needs to come from non-pension savings.

Translating income into a pension pot

Once you know the after-tax income you want to top up beyond the State Pension, you can estimate the size of pot you'd need. Standard Life, using MoneyHelper's annuity tool, ran the figures in 2025 against the PLSA standards. To buy a level annuity providing the income required for a Moderate retirement, a single person would need around £439,000 of pension savings; a couple would need around £428,000 between them. For Comfortable, a single person would need around £709,000.

Past performance is not a reliable indicator of future results, and annuity rates change with interest rates and life expectancy. These figures are illustrative only — they assume a level annuity with no inflation protection, no spouse's pension, and full State Pension entitlement. An inflation-linked annuity would require a substantially larger pot for the same starting income.

Drawdown changes the picture

Most people no longer buy an annuity with their whole pension. Many use income drawdown — keeping the pension invested and taking income flexibly — or a blend of drawdown and a smaller annuity. Drawdown gives you more control and the chance for further investment growth, but it carries investment risk: the value of investments and the income from them can fall as well as rise. You may get back less than you invest, and if you draw too much in poor markets, your pot may not last as long as you do.

A common rule of thumb is that drawing around 3–4% of your pot a year is a sustainable starting point for a 25–30 year retirement, but the right figure depends on your investment mix, your other income, and how long you live. There is no single "safe" rate, and rules of thumb are no substitute for a plan.

Use cashflow forecasting to build your own number

National averages will only get you so far. Two people on the same income can need very different pots — depending on whether they own their home outright, whether they have a defined benefit pension, whether they want to gift to children, whether they plan to downsize, and so on.

This is where cashflow forecasting helps. Tools such as CashCalc let you model your specific income, expenditure, assets, and liabilities year by year through retirement, including different scenarios — retiring earlier, working part-time, taking tax-free cash up front, or leaving an estate to the next generation. The output isn't a guarantee, but it gives you a clearer view of what's plausible and what's not, and where your plan is most exposed to risk.

A few honest caveats

Tax treatment depends on individual circumstances and may be subject to change in future. Pension and ISA rules, allowances and tax bands change frequently — what's true today may not be true in five years. Inflation also matters: a £40,000 income in today's money is worth less in twenty years' time, so any plan needs to factor in rising prices, ideally with cover from an inflation-linked element of income.

Two retirements with the same headline number can also feel very different. Health, family circumstances, where you live, and what you enjoy doing all shape the cost of the life you want. The standards are a useful guide, not a goal.