Do you plan to enjoy a comfortable retirement when you stop working? If so, you may need to review your pension savings.  The amount of money you may need could come as a shock!

According to the latest data, a single person now needs £43,900 a year. Meanwhile couples need £60,600 a year[1].

But what does a “comfortable” retirement mean, and why does it cost so much?

By exploring this and understanding the associated costs, you can better plan for a financially secure retirement.

A “comfortable” retirement is defined as one that enables financial independence. As well as allowing for the enjoyment of a few luxuries. This might mean a Mediterranean holiday each year, several weekends away, and regular meals out.

Other indicators include a comprehensive broadband and TV package, clothing budgets, and other allowances. For a single person, these costs total £43,900 annually after tax. To cover this, they would need a pre-tax income of £40,245, in addition to the State Pension, which is £11,973 for the 2025/26 tax year. If you’re relying on a pension pot to provide this income through an annuity, the total savings required ranges from £540,000 to £800,000.

Breaking down the numbers:
The figures account for essential expenses and discretionary spending. These projections include weekly averages of £75 for groceries, £42 for dining out, and £21 on takeaways. As well as annual costs for holidays and clothing. They aim to reflect realistic living standards rather than extravagant lifestyles. For couples, their combined expenses raise the financial requirement.

Annuity rate calculations vary based on factors such as health, age, and the type of annuity selected. Currently, they range from £5,000 to £7,500 for every £100,000 of savings. While annuities provide a guaranteed income for life, fluctuations in rates and individual circumstances can significantly impact your retirement planning.

How to improve your retirement outlook:

Start early: Time is your greatest asset. Regular contributions made earlier in your career allow savings to grow due to compounding interest.

Maximise employer contributions: Take full advantage of workplace pension schemes. Also match your employer’s contributions whenever possible.

Consider investments; These may provide higher returns than a traditional pension plan, although they carry higher risks.

Delay retirement: Working a few extra years can give your savings longer to grow. Furthermore, this reduces the number of retirement years your funds need to cover.

Review your spending: Budget carefully during your working years to prioritise retirement savings.

Seeking professional advice can help you identify the right approach to suit your individual circumstances and goals.

What’s your retirement strategy?
Your retirement should be a time to enjoy financial freedom and live the life you’ve always wanted. However, achieving this requires careful planning and preparation. The sooner you begin taking action, the better your chances of building a secure future,

How much for a comfortable retirement? Early planning provides you with the opportunity to fully capitalise on growth over time. To understand how we can help you with your financial planning and long-term retirement goals, call us today. For a free initial consultation, call us on 01603-957599.

[1] Data from the Pension and Lifetime Savings Association (PLSA) 04.06.25