New Figures Show the UK isn’t Saving Enough for Retirement

The updated Retirement Living Standards show around 82% of the working population are on track for a minimum lifestyle. Fewer than one in four are expected to achieve a moderate standard. Just 9% are on course for a comfortable retirement.

What does retirement now cost?

The standards are calculated by the Centre for Research in Social Policy at Loughborough University. They reflect what members of the public agree people need for different lifestyles in retirement.

• A minimum lifestyle now costs £13,900 a year for one person or £22,500 for two
• The moderate figures have risen to £32,700 and £45,400 respectively
• For a comfortable retirement, the annual cost is now £45,400 for one person. A two-person household would need £62,700.

These amounts are after tax and don’t include housing costs. Anyone expecting to rent or continue paying a mortgage in retirement may need considerably more.

The State Pension leaves a gap

The current full State Pension is £241.30 a week in 2026/27, which works out at around £12,548 a year which is roughly £1,350 below the minimum standard for someone living alone. Not everyone receives the full amount, as payments depend on their National Insurance record.

For two people who each receive the full State Pension, it could be enough to meet the minimum standard, depending on their circumstances.

Most people aren’t on track for the retirement they expect

The figures mean around 77% of the working population aren’t expected to reach a moderate retirement. Around 91% are unlikely to achieve the comfortable standard.

Pensions UK says current saving levels won’t be enough for the retirement many people expect. Without higher savings, some could face a sharp drop in income when they finish working.

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How much might people need to save?

Pensions UK estimates that a single person may need a pension pot of between £335,000 and £505,000 for a moderate retirement, rising to between £560,000 and £845,000 for a comfortable retirement.

For couples, the estimates are lower per person, as costs are shared. Each partner in a two-person household may need a pot of between £170,000 and £255,000 for a moderate retirement, or between £315,000 and £470,000 for a comfortable retirement.

These figures are only a guide and are based on annuity assumptions. They also assume someone receives the full State Pension and has no housing costs.

The Pensions Commission is considering whether minimum automatic enrolment contribution rates should increase in future, though no decision has been made at this time.

For more information, read the Pensions UK Retirement Living Standards update