Pension pot required for ‘comfortable’ retirement reaches £691,000 | Personal Finance | Finance
A single person needs a £691,000 pension pot for a ‘comfortable’ lifestyle in retirement (Image: Getty)
A single person needs a £691,000 pension pot for a “comfortable” lifestyle in retirement, new analysis shows. Calculations from wealth manager Quilter show that an individual would need £413,000 for a “moderate” retirement lifestyle.
A “minimum” standard of living can “largely” be met with just the State Pension, according to Quilter. Jon Greer, Head of Retirement Policy at the firm, said: “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.”
He explained Quilter’s figures assume people are mortgage-free, but this will become less common in future as Brits take out larger mortgages with much longer terms.
Mr Greer said: “Factoring in housing costs could push the required income higher still, making early planning and regular reviews even more important.”
Quilter’s analysis shows that for couples, the cost is lower per person, but substantial savings would still be needed.
For a “comfortable” standard of living, each partner needs a pension pot of £389,000, while a “moderate” lifestyle would require £208,000 each, according to Quilter.
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It puts annual spending for a “comfortable” retirement lifestyle at £45,400, with £32,700 needed for “moderate” and £13,900 for “minimum” lifestyles.
Annual spending for couples with joint pots is £62,700, £45,400 and £22,500 for “comfortable”, “moderate” and “minimum” levels respectively.
Mr Greer said things have become “increasingly confusing” for savers, pointing to pensions being drawn into Inheritance Tax from 2027, salary sacrifice changes and the threat of more changes to come.
He added: “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.”
Quilter said its analysis is based on the latest update to the Pensions UK Retirement Living Standards.
These have been refreshed to reflect rising costs across everyday essentials, social activities and hobbies.
