How much will you need to retire?

When you stop working is up to you, but whether you can afford the retirement lifestyle you want all comes down to how much you've managed to save.

To help you work out if your retirement savings are on track, Which? has surveyed more than 5,000 retirees about their spending habits. 

Here we'll give you get a better idea of how much money you'll need in retirement, and how much you'll need to save in advance to generate that income. 

Which? retirement income targets

• Our 'essential' income target covers spending on: food and drink (excluding meals out), housing payments (mortgage payments, rent or council tax), transport, utility bills, insurance, household goods, phone broadband, clothes, shoes and health products.

• Our 'comfortable' income target includes the essentials above, plus: regular short-haul holidays, recreation and leisure, tobacco, gifts to family and friends, alcohol and charity donations. 

• Our 'luxury' income target covers all the spending above, plus: extended or long-haul holidays, health club memberships, home improvements, private healthcare and a new car every five years.

What are these income targets based on?

To get a detailed understanding of retired households' spending habits, we carry out an annual survey of retired Which? members, where we ask about their monthly expenditure in different areas.

By grouping individual spending categories together, we've put a figure on the annual amount needed to achieve three different standards of living in retirement. 

These income targets are the amount you'll need your pensions (the state pension and private pensions combined) to generate after tax is deducted.

The targets for single retirees might seem high compared to couples. That's because many expenses - such as council tax, energy bills and insurance premiums - aren't simply halved when you live alone. 

Retirees' spending habits

Here's a breakdown of how much retirees in our survey said they spent on average on different products and services over a year.

By switching between the three tabs you can see which spending categories are included in each of our retirement income levels ('essential', 'comfortable' and 'luxury'). 

One-person households

Two-person households

Where will your retirement income come from?

A combination of the state pension and private pensions (which you can access when you turn 55) are the building blocks of most people's retirement income.

State pension

You'll qualify for payments when you reach 66, but this is scheduled to rise to 67 between 2026 and 2028.

In 2024-25, the full level of new state pension (for people who reach state pension age on or after 6 April 2016) is £221.20 a week (£11,502.40 a year), but not everyone gets that much. Find out more in our guide to how much state pension will I get?

Final salary pension

If you have a final salary (also known as defined benefit) pension, you’ll receive a guaranteed income, which is calculated based on your length of service and your earnings while you were working. Deduct tax and you should have a good idea how close you are to your target amount.

You should receive annual updates telling you how much you can expect to get. 

Defined contribution pension

Defined contribution pensions are the most common type of private pension. You (and your employer, if it's a workplace scheme) pay money in, which is then invested.

The amount you get when you retire depends on how much you've contributed, how well the investments have performed, and how you decide to access your pot. 

Your options for accessing this money are: 

• Buying an annuity, which guarantees an income each year for life
• Pension drawdown, where you leave your pension invested and take income as you need it
• Taking lump sums

How much do you need to save to reach your retirement income target?

Our targets are designed to give you a better idea of how much you might need to spend each year in retirement. The next step is working out how much you'll need to save in your pension to generate the gross (before tax) annual income you want. 

We've calculated how much you would need in your private pensions to reach our 'comfortable' income target of £20,000 a year, if you live alone: 

• £173,000 if you opt for drawdown
• £182,000 if you opt for an annuity

For a couple, this is how much you'd need in your private pensions to reach the 'comfortable' income target of £28,000 a year:

• £115,000 if you opt for drawdown
• £131,000 if you opt for an annuity

Our drawdown figures are based on a saver withdrawing all their money over 20 years from age 65, and assume investment growth at 3%, inflation at 1% and charges of 0.75%. 

Annuities are a more expensive option than drawdown because they produce a guaranteed income for life which might stretch beyond the average 20-year retirement. 

When should you start saving for retirement?

The earlier you can start saving for retirement, the better. 

When you pay money into a pension you benefit from tax relief. If you're a basic-rate taxpayer, this means that a £100 contribution is boosted to £125. Thanks to tax relief and investment growth, any contributions you make today are likely to be worth much more by the time you retire.

Under auto-enrolment rules, the minimum total contribution for a workplace pension scheme is 8% of your ‘qualifying earnings’ - made up of 5% from you (including tax relief) and 3% from your employer. 

You can opt to pay in more than this - a great idea if you can afford to do so. Some employers will even match your contributions. 

• To get a better idea of how much your pension pot might be worth at retirement, and how much income this could give you, use Which?’s free pension calculator.