“How much do I need?” is the question most people ask about retirement – and the honest answer is that it depends on the life you want. Here is a structured way to find your own number.
1. Estimate your retirement spending
List the costs you expect in retirement: housing (will the mortgage be paid off?), bills, food, transport, holidays, hobbies, helping family and care costs later in life. Many people spend more in the early, active years of retirement and less later, apart from potential care costs.
2. Subtract guaranteed income
The full new State Pension is £241.30 a week in 2026/27 (GOV.UK), around £12,548 a year. Check your own forecast, as your amount depends on your National Insurance record. Add any defined benefit (final salary) pension you have.
3. Work out the gap
Whatever is left is the income your own savings need to provide. One common rule of thumb is to estimate a sustainable withdrawal rate from an invested pot; another is to look at annuity quotes, which show how much guaranteed income a pot buys at today's rates. Both change with markets, so treat them as rough guides and revisit them.
4. Project your current savings
Use our Pension Calculator to project your pot to your chosen retirement age, and look at the result in today's money. Then test what happens if you contribute 1% or 2% more, or retire a couple of years later.
5. Use independent benchmarks
The Pensions and Lifetime Savings Association's Retirement Living Standards describe what minimum, moderate and comfortable lifestyles typically cost for single people and couples. They are a useful sense-check rather than a target.
6. Close the gap
- Maximise employer matching.
- Use pay rises to increase contributions.
- Keep charges low.
- Consider ISAs alongside pensions for flexibility.
- Check your State Pension record for gaps.
This article is general guidance. For a personal plan, consider regulated financial advice or free guidance from Pension Wise.
