April 12, 2024

Is £738,000 needed in your pension pot for a comfortable retirement?

New research from Quilter shows that for a single person to achieve a comfortable lifestyle in retirement they must have a pension pot of £738,000.

Considerations taken in to account include annual inflation, perceptions of varying levels of retirement and the new State Pension, with the findings show how much people will need to live on in retirement, to achieve a minimum, moderate or comfortable retirement lifestyle.

What is considered as a comfortable retirement lifestyle?

Quilters calculations show that in just one year, the size of a pot needed for a comfortable retirement has grown by £100,000. And for a couple, a pot close to a million (£929,000) injoint pension wealth is needed to achieve a comfortable retirement.

Now, a comfortable retirement requires a single person to have an annual income (gross of tax) of £39,387 per year on top of the state pension, which in 2024-25 is £11,500 per year.

According to Quilter for this research, a comfortable retirement consists of a range of measures including a fortnight 4-star holiday once a year in the Mediterranean, three weekends away in the UK a year, up to £1,500 a year on new clothing and footwear. Also, gifting family members with £1,000 a year was taken in to consideration too.

What is considered as a moderate retirement lifestyle?

For this, a single person will need to build up a pension pot of approximately £459,000. A moderate lifestyle includes being able to afford £74 a week on food (including takeaways and eating out) as well as two weeks in Europe and a long weekend in the UK every year. Gifting £1,000 to family was also highlighted as a necessity among retirees aiming for a moderate retirement.

And what is considered as a minimum retirement lifestyle?

Finally, for someone looking to achieve a minimum lifestyle which requires someone to have £3,357 in extra income per year on top of the State Pension they need to have built up a pot of around £63,000. A minimum lifestyle enables someone to spend £50 on a weekly food shop, one week long holiday a year and no car.

See this table for the breakdown of the breakdown of a comfortable, moderate and minimum retirement lifestyle:

How can working with a financial adviser help you maximise your retirement plans?

Through a financial planning meeting, we’ll review any savings and investments, and we’ll work with you to create a tax-efficient plan to make the most of your accumulated wealth. We’ll look at all of your pensions, including the inactive ones, and work together on a strategy to organise them and make the most of them going forward. We’ll look at your overall income sources (including from your pensions and investments), and we’ll try to find ways to diversify to ensure a comfortable and financially secure retirement. You don’t have to be of retirement age to book your financial planning appointment. The sooner the better is ideal, and an annual review is recommended. There is connection between financial health and your overall wellbeing in retirement, so early and strategic planning from an adviser offering practical advice to suit the lifestyle you love comes recommended.

We’re here to help

Our role as your Financial Adviser is to understand what you want to achieve, to recommend a suitable financial plan of action to get you there, and to be by your side through every step of the journey.

For more information please call Willow Tree Financial Services on 01323 436680 or email Rachael@willowtree-fs.co.uk.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Your home may be repossessed if you do not keep up repayments on your mortgage.
* Calculations assume an escalating income of 3% based on someone who is aged 66 (which is the current age to receive state pension). All pots rounded to the nearest thousand. For the singles an annuity rate of 5.34% was used. For the Joints it was 4.79%.
** Minimum for a couple is covered by the State Pension

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