By the time we reach our mid-50s, many of us start to think seriously about life beyond work. With the minimum pension access age set to rise to 57 from April 2028, questions about how much money we need to retire comfortably are more relevant than ever.
Inflation, interest rate fluctuations, and changing lifestyles mean the “cost of retirement” is not fixed. But by using benchmarks such as the Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards, you can begin to map out what a minimum, moderate, or comfortable lifestyle might cost — and how to work towards it.
At a Glance
- Retirement planning is now more flexible, but also more personal — the responsibility rests with each of us to plan effectively.
- The PLSA’s Retirement Living Standards provide three tiers of retirement lifestyles: minimum, moderate, and comfortable.
- Rising living costs mean these benchmarks have increased over the past year — and may continue to do so.
- To achieve comfort, a single person may need a retirement income of around £43,900 a year, while a couple may need around £60,000 a year.
- Professional advice can help plan your retirement income in a structured tax-efficient way and aligned with your goals.
How Much Money Do I Need to Retire?
The PLSA’s most recent research (February 2025) sets out the following annual income targets:
- Single person: £13,400 (minimum), £31,700 (moderate), £43,900 (comfortable)
- Couple: £21,600 (minimum), £43,900 (moderate), £60,000 (comfortable)
These figures illustrate the rising cost of living in retirement — they’ve increased within just 12 months and may rise further if inflation continues to push up day-to-day expenses.
What Do Minimum, Moderate and Comfortable Mean?
- Minimum retirement – Covers the basics. As an example, imagine UK holidays, eating out once a month, and modest spending on clothes and essentials. Running a car may not be feasible. Even with the 2025/26 full State Pension (£11,973), most people will still face a shortfall.
- Moderate retirement – Offers more financial flexibility and some luxuries. You might afford a two-week holiday in Europe, eat out a few times a month, and run a small car.
- Comfortable retirement – Allows for more choice and regular treats, such as beauty treatments, theatre trips, European holidays, and UK weekend breaks.
By costing out these scenarios, you can begin to see where your savings and pensions may fall short — and what you need to do to close the gap.
Your Pension Income Reality Check
The PLSA estimates that to generate an income at the “comfortable” level, a single person may need a pension pot between £540,000 and £800,000 (alongside the State Pension). These figures assume using your savings to purchase an annuity, which is setup for a lifetime income.
For many savers, these numbers highlight an uncomfortable truth: modest contributions over a working lifetime may not be enough to secure the lifestyle they want. The good news is that action taken now — whether you’re 20 years from retirement or just five — can make a big difference.
Boosting Your Retirement Savings
If you’re still working, there are several ways to increase your retirement income:
- Additional Voluntary Contributions (AVCs): If you’re part of a workplace pension, you may be able to top up beyond the standard contribution levels.
- Employer matching: Many employers increase their contributions if you do — a simple way to grow your savings more quickly.
- Lump-sum top-ups: Windfalls, bonuses, or inheritances can be paid into your pension, potentially with tax relief.
- Tax-efficient investing: ISAs and other vehicles can complement your pension savings, giving you flexibility later.
Thinking in terms of lifestyle goals — holidays abroad, a new home, visiting family — can also act as a strong motivator to keep saving.
Accessing Your Pension: Choices and Challenges
Once you reach pension access age, you’ll need to decide how best to draw your income. Options include:
- Annuities – Provide a predictable income for life but may reduce flexibility.
- Drawdown – Keeps your pension invested, with the freedom to withdraw funds as needed. The risk: your pot could run out if not managed carefully.
- Blended strategies – Many people combine annuities for essentials with drawdown for discretionary spending.
Each option carries different risks, tax implications, and inheritance considerations. Choosing the right approach requires professional guidance.
The Role of the State Pension
The State Pension provides a foundation for retirement income but is unlikely to be enough on its own. With the State Pension age rising to 67 from April 2026, many will need to bridge the gap with workplace and private pensions.
It’s vital to:
- Check your National Insurance record to ensure you qualify for the full entitlement.
- Factor the timing of State Pension payments into your income planning.
- Understand how the State Pension interacts with other income sources for tax purposes.
Why Professional Advice Matters
Planning for retirement is complex, particularly if you have multiple pensions, live abroad, or expect to inherit or pass on significant wealth. Professional advice can help you:
- Build a personalised retirement plan aligned with your lifestyle goals.
- Calculate how much you need to save for different retirement standards.
- Structure withdrawals tax-efficiently, including the 25% tax-free allowance.
- Prepare for changes such as the inclusion of pensions in inheritance tax from April 2027.
- Plan for healthcare or long-term care costs in later life.
Final Thoughts
Retirement should be a time to enjoy the rewards of your hard work. Whether your dream is a quiet life in the countryside, regular travel abroad, or simply more freedom to spend time with family, having a clear idea of how much you’ll need — and how to get there — is essential.
The sooner you start planning, the more options you could have. But even if retirement is just around the corner, it’s never too late to take steps to secure your financial future.
At Blacktower, we’ve been helping clients across multiple countries since 1986. Speak to us today to discover how we can help you prepare, protect, and enjoy your retirement with confidence.
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This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. Investing involves risk. The value of investments can go down as well as up, and you may not get back the amount originally invested. Past performance is not a reliable indicator of future results. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
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