What’s the cost of a comfortable retirement?

How much do I need to retire? By the time we reach 55, many of us begin to prioritise pension planning, and this question often tops our minds. With inflation rates still see-sawing, and interest rates falling, the cost of a comfortable retirement may well keep rising. We explore the financial aspects of what a fulfilling retirement may require.

At a glance

• We now have more choice, more flexibility and more personal accountability for our retirement income. But how much do we need to save to feel ‘comfortably off’ once we stop working?
• The Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards help provide a budgeting benchmark for three different standards of living: minimum, moderate and comfortable.
• If you’re planning your retirement lifestyle, these living standards are a practical starting point for anyone unsure about whether they need to be saving more into their pension.

Whether you’ve got 20 years to go before you retire or only a few, it’s vital to have an idea of just how much money you’ll need for a comfortable lifestyle once you stop earning a regular salary. Especially if you decide to retire before you reach State Pension age; which is rising to 67 from April 2026.

How much money do I need to retire?

The PLSA has calculated new figures indicating how much money individuals and couples will need to have a comfortable, moderate or minimum standard of living in retirement.

The important thing to be aware of is, these figures have increased in the past 12 months, and may continue to rise if the cost of living also continues to creep up. The PLSA’s latest figures, released in February 2025, show that a single person will now need £13,400 a year to achieve the minimum living standard. 

They would need £31,700 a year for moderate, and £43,900 a year for a comfortable lifestyle, which includes a two week holiday in Europe and several UK mini breaks. For couples, the price tag of these three lifestyles is £21,600, £43,900 and £60,000 per annum.¹

What do we mean by a minimum, moderate and comfortable retirement?

The minimum living standard covers most people’s basic needs. For example, you could holiday in the UK, eat out about once a month and spend around £450 on clothes and footwear a year. But don’t expect to run a car. Even with the 2025/26 full State Pension of £11,973 per year, there’s still a shortfall.

The moderate lifestyle provides for more financial security and, let’s face it, fun. For example, you could afford a two-week holiday in Europe and eat out a few times a month. And you could a small car.

At the comfortable level, you could enjoy some luxuries and higher ticket items, such as regular beauty treatments, theatre trips and at least two weeks in Europe, plus some weekend mini breaks a year.

Costing out real life scenarios and discussing them with a financial adviser will help you map out your own savings goals. If you’re still working, this is the time to think about Additional Voluntary Contributions (AVCs) to boost a workplace pension and take advantage of your employer’s contributions too. Thinking about those holidays, or friends you’ve been longing to visit, , is a powerful psychological motivator to keep topping up your pension while you’re still working.

Whatever point you’re at on your saving journey, having a specific income in mind can help you focus on the end goal – that deckchair in the sun!

Your pension income reality check

Many people may be shocked to learn how little income their savings will provide, or worry that they’ve left it too late to start saving. Which is why it’s vital to realise the power of saving ‘sooner rather than later,’ and not simply hoping for the best.

Assuming you qualify for the full annual State Pension, the PLSA says you’ll still need to build up a >pension pot of £540,000, to £800,000 (for a single person) to achieve a comfortable retirement.¹ This is if you want to turn your pension into an annuity, which pays you a guaranteed annual income for life in retirement. As you get closer to your actual retirement, you’ll be facing other decisions too which will impact your retirement income, and financial wellbeing. Choosing the best way to access your pension when the time comes can be quite complex, especially when you factor in tax implications. It’s always a wise idea to speak to us so you know all your options.

The good news is that with a combination of the full State Pension and a workplace pension, most people should be able to look forward to the PLSA’s minimum level of retirement.

However, a modest contribution level is unlikely to be enough to get you over the line between the PLSA’s minimum and moderate lifestyle standards. That’s why leaning into the process and starting to plan proactively for your later years while you’re still working can – literally – pay dividends.

Still have questions about the cost of a comfortable retirement?

It’s exciting to think what lies ahead after that last day in the office. We can give you an idea of what your retirement income will be, based on how much you’re saving, and help you work out an achievable financial plans for your retirement. You can also discover how much money you need to save for retirement or use our pension calculator to find out how much you need to save to fund the lifestyle you want.

Whether it’s a three week holiday of a lifetime, escaping to the country, or simply being able to visit family and friends whenever you like, having those specific retirement goals to save for is the first step. We all deserve a comfortable retirement. And planning your longer-term finances now will make you feel confident and in control of some of the best years of your life.

Get in touch today.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Auto-Enrolment products are not regulated by the Financial Conduct Authority.

Source

¹Retirement Living Standards, Pensions and Lifetime Savings Association, 2025. All figures quoted were developed by the Centre for Research in Social Policy at Loughborough University on behalf of the PLSA.

SJP Approved 29/07/2025