Planning for retirement means more than just hoping for enough savings — it means understanding what “enough” actually looks like. How much income will you need? What size pension pot gives you flexibility? What does “comfortable” mean in realistic terms in the UK in 2025? Let’s dig into data and break down concrete figures to help you set a target that works for your retirement.
What are the Retirement Living Standards?
In the UK, the Retirement Living Standards (RLS) — produced by the Pensions and Lifetime Savings Association (PLSA), with research from Loughborough University’s Centre for Research in Social Policy — define three levels of retirement lifestyle: Minimum, Moderate, and Comfortable.
Here’s what those look like in practice:
| Household Type | Minimum* | Moderate | Comfortable |
|---|---|---|---|
| One person | ~ £13,400 / year | ~ £31,700 / year | ~ £43,900 / year |
| Two person household | ~ £21,600 / year | ~ £43,900 / year | ~ £60,600 / year |
* “Minimum” means covering basic needs and a few occasional treats — a week’s holiday in the UK, eating out once a month, modest leisure. “Moderate” adds more flexibility, more frequent leisure, some travel. “Comfortable” means wider options: regular holidays, more social/leisure spending, perhaps a nicer home or better transport.
Pension Pots: What Lump Sum Do You Need?
Knowing annual living costs is one thing. Understanding how big a pension pot you need to generate those costs is another. Depending on investment returns, withdrawal rates, state pension, etc., the required pot can vary widely. Here are some of the latest estimates:
- For a single person aiming for a comfortable lifestyle, PLSA estimates a pension pot in the range of £540,000 to £800,000 if using an annuity.
- For a couple sharing costs, the required pot drops (because you share housing, utilities, etc.), but is still substantial: somewhere around £515,000 for a moderate lifestyle; up to £900,000+ for a comfortable one.
- For a moderate standard, for a single person, the rough pot might be £330,000-£490,000 depending on assumptions such as investment returns, annuity rate, and years in retirement.
State Pension Contribution & Gaps
The state pension helps — but often doesn’t cover everything.
- The full new State Pension for 2025/26 is about £11,973/year.
- If you aim for a “minimum” retirement, the RLS figures suggest some households will manage with state pension plus smaller savings. But for “moderate” or “comfortable” lifestyles, there is a big gap to fill via workplace or private pensions and other savings.
Key Risks & What Affects How Much You’ll Need
When working out your own target, these variables matter a lot:
- Where you live (London vs elsewhere): housing, transport, and some services cost more in London. RLS includes “London” adjustments.
- Household status: single vs two persons — sharing costs saves.
- Housing tenure: owning outright vs renting vs mortgage — big difference.
- Health, longevity, unexpected costs like long-term care: might increase required savings.
- Inflation and investment returns: what seems enough today may not be enough in 10-20 years.
- Retirement age: retiring earlier means more years to support.
- State Pension changes & taxes: rules may change, which affects how much you need to rely on private savings.
Putting It All Together: Example Scenarios
To bring this to life:
- Scenario A (Single, Moderate Lifestyle, Retires at 67)
Wants moderate lifestyle: ~£31,700/year. State Pension gives ~£12,000/year, so needs ~£19,700 from pension/private savings. If planning to draw down over ~25 years, and assuming investment returns net of costs of ~4-5%, you might need a pot of ~£330,000-£400,000 depending on withdrawal strategy. - Scenario B (Couple, Comfortable Lifestyle, Retires at 65)
Needs ~£60,600/year. State Pensions for both might cover perhaps ~£23,000–£25,000 (depending on contributions/history). The rest — ~£35,000-£40,000/year — must come from other sources. That might require a pension pot in the region of £800,000-£1,000,000+ depending on how conservatively you invest and draw down.
These are just illustrative; your target could be lower or higher depending on preferences and other income sources (property, part-time work, investment income outside pensions).
Why Many People Fall Short
Government and industry research show that a large portion of UK savers are likely to undersave if they aim for more than the minimum standard:
- In 2025, the UK government’s Analysis of Future Pension Incomes found 43% of working-age people are undersaving relative to the target replacement rates before housing costs.
- When measured against the Retirement Living Standards: 13% are projected to fall below the Minimum level; 73% below Moderate; 91% below Comfortable.
Specific Action Points
Here are practical steps you can take now to move toward a retirement that feels comfortable (or at least secure), based on your own goals:
- Define your target standard.
Decide whether you’re aiming for Minimum, Moderate or Comfortable. Think about the lifestyle you want: travel, leisure, home, giving support, etc. Don’t assume Moderate or Comfortable is out of reach — it just means planning more intentionally. - Estimate your current projected income in retirement.
– Calculate what you expect from the State Pension (check your NI record).
– Add up all your current private + workplace pension savings, and any other income (rent, investment, etc.).
– Estimate shortfall: how much more income/year you’ll need beyond state/private pensions to reach your target. - Decide on your pot-size target.
Use the figures above to set a pension pot target: for example, £300-£500k for a Moderate single person; £500-£900k for a Comfortable couple. Adjust for your expected retirement age, longevity, investment return, and drawdown strategy. - Increase contributions where possible.
– If you’re in a workplace pension, consider boosting your percentage contribution. Even 1-2% more makes a huge difference over decades.
– Use additional vehicles (ISAs, savings, investments) to supplement.
– Leverage employer matching / auto-enrolment. - Monitor, review and adjust.
– Revisit your plan every few years: are costs or your goals changing?
– Monitor inflation, investment performance, pension fees.
– Adjust lifestyle expectations if necessary, but try to keep aspirations realistic. - Consider delaying retirement or working part-time.
Pushing your retirement age even by a few years can reduce the number of years you’ll need money, increase the years you have to save, and possibly increase state pension or other income. - Plan for unexpected costs.
Build buffers for health, long-term care, property maintenance. Save outside of your pension for flexibility. - Seek guidance if needed.
A financial adviser or using trusted tools / calculators can help you refine assumptions (rate of return, life expectancy, fees, etc.). Even a brief session can clarify a lot.
Final Thought
Retirement comfort is not impossible, but it does require clarity, planning, and regular action. Use the RLS numbers and current research as your guideposts. Know what you want, know what you’ve got, and incrementally build the gap. Even small changes now (extra saving, reviewing pensions) will multiply over time thanks to compounding.
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