How much do you need for a comfortable retirement?

clock • 2 min read

PARTNER INSIGHT: We are all living longer according to the Office for National Statistics - how can we effectively plan for our financial futures

Research by Royal London finds that the average UK earner will need a pension pot of £260,000 to maintain their living standards. It's called ‘the pension mountain' - the size of funds required by savers to afford a pension that keeps them in similar financial circumstances to their working life.

The figure has leaped from £150,000 to £260,000 since 2002. This figure could actually end up much higher, as younger generations face up to failing to afford to buy a house and then be hit with rental costs into retirement. The £260,000 figure assumes that a worker on an average wage of £27,000 will draw a state pension of £8,500 a year on retirement and have generally lower travel and mortgage costs in older age. This will mean they require more than £9,000 private pension income to help them match their previous living standards.

Life expectancy

Fifteen years ago, a lower life expectancy and higher interest rates impacted on the pension pot figure. "If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build a much bigger pot than in the past," said Royal London personal finance specialist Helen Morrissey. "More worrying still, we can no longer assume that we will be mortgage-free homeowners in retirement."

The potential for rent costs to impact on living standards must be factored into people's funding strategy, she added. "For all of these reasons, we cannot afford to be complacent about current levels of retirement saving."

Government move

While the government's move to create an 8% mandatory pension contribution from a combination of the employer and employee from April 2019 is a "great start", it needs to work more quickly to "nudge people up" to more realistic savings levels. "Without this, many millions of people will face a sharp drop in living standards," Morrissey concludes

To help your clients meet their retirement objectives click here to read our investors guide.

More on Partner Insight

Partner Insight: Carry forward – where do people go wrong?

Partner Insight: Carry forward – where do people go wrong?

Fiona Hanrahan, Senior Pensions Development and Technical Manager, Royal London
clock 04 March 2025 • 5 min read
Partner Insight: How philanthropy advice could head off a client crisis

Partner Insight: How philanthropy advice could head off a client crisis

Younger clients are more likely to want advice on charitable giving

Gareth Jones
clock 08 February 2024 • 1 min read
Partner Insight: Cash vs investing — five key points to consider when talking to clients

Partner Insight: Cash vs investing — five key points to consider when talking to clients

Gillian Hepburn
clock 19 October 2023 • 5 min read

In-depth

Sudden departures and a government review – what next for the FOS?

Sudden departures and a government review – what next for the FOS?

A look at the Ombudsman’s roadmap to modernisation

Isabel Baxter
clock 07 April 2025 • 6 min read
Advisers avoid 'knee-jerk' dismissal of US equities amid Trump's tariff shake-up

Advisers avoid 'knee-jerk' dismissal of US equities amid Trump's tariff shake-up

‘Although many market values have fallen, the fundamentals remain largely intact’

Isabel Baxter
clock 03 April 2025 • 5 min read
'A divisive and difficult topic': Advice firms on DE&I progress

'A divisive and difficult topic': Advice firms on DE&I progress

Industry shares thoughts on regulator’s adjustments

Isabel Baxter
clock 31 March 2025 • 6 min read