Start with the income, not the pot
“How much do I need in my pension” is almost impossible to answer directly, and much easier to answer backwards. Decide roughly what you want to spend each year, subtract what is going to arrive anyway, and only what is left has to come out of a pot. That last step is what the calculator above does.
The largest thing arriving anyway is the State Pension. The full new State Pension is £241 a week, which is £12,548 a year, and for a couple who both qualify in full that is £25,095 before either of them touches a pension pot. It is paid for life, it rises each April, and it is the reason the pot needed for a modest retirement is very much smaller than people assume.
What other people spend
The most widely used reference points in the United Kingdom are the Retirement Living Standards published by the Pensions and Lifetime Savings Association, researched during 2025 with the modelling completed in 2026. They are not targets or recommendations; they are researched estimates of what three different lifestyles actually cost, outside London, for people who own their home outright. They deliberately leave out housing costs, social care and dependants, so rent, a remaining mortgage or any care needs have to be added on top. The equivalent London figures run a few per cent higher across the board.
| Standard | Single person | Couple |
|---|---|---|
| Minimum All needs covered, plus a short UK holiday and eating out about once a month | £13,900 a year | £22,500 a year |
| Moderate More financial security and flexibility: a two-week holiday in Europe and a car replaced every ten years | £32,700 a year | £45,400 a year |
| Comfortable More financial freedom and some luxuries: regular beauty treatments, theatre trips and a three-year-old car replaced every five years | £45,400 a year | £62,700 a year |
What that means as a pension pot
Below, each standard has the State Pension subtracted first, and the remainder is priced as a level lifetime annuity bought at 67, single life, with a five-year guarantee, on the gilt yields shown at the top of this page. The couple column assumes both people receive the full State Pension.
| Standard | Left to fund: single | Pot needed | Left to fund: couple | Pot needed |
|---|---|---|---|---|
| Minimum | £1,352 a year | £16,554 | nothing | — |
| Moderate | £20,152 a year | £246,681 | £20,305 a year | £248,546 |
| Comfortable | £32,852 a year | £402,139 | £37,605 a year | £460,312 |
Estimates from this site’s own pricing model rather than offers from any insurer, and before income tax. Spending standards are costs, so a target drawn from them is an after-tax figure and needs a larger pot than the same number before tax; the calculator above handles that either way. The couple column prices the household’s whole shortfall as one single-life annuity, which is the simplest comparison rather than the safest arrangement: an annuity that continues to a surviving partner needs a larger pot again, and the difference at these ages is around a tenth.
The pattern in that table is the useful part. Reaching the minimum standard barely requires a pot at all once the State Pension is counted, particularly for a couple. The step from minimum to moderate is the expensive one. And the couple figures are lower per person than the single ones despite the higher spending target, because two State Pensions do a great deal of the work.
Five things this arithmetic does not capture
- Inflation. A level income buys less every year. At 2.5% inflation it loses roughly 46% of its buying power over 25 years. An annuity that rises with inflation fixes this and starts about a third lower, so it needs a substantially bigger pot for the same opening income.
- Retiring before the State Pension starts. Anyone stopping work at 60 has to fund the whole amount themselves for seven years before the State Pension appears. That bridge is often the largest single item in an early retirement plan and it does not show up in a figure like the ones above.
- Spending is not flat. Most people spend more in their sixties and seventies, less in their eighties, and potentially a great deal more again if care is needed. A single yearly figure smooths over all three phases.
- Housing. The standards assume the home is owned outright. Rent or a remaining mortgage has to be added to the income target, and it is usually the biggest adjustment anyone makes to these numbers.
- Everything else you own. Individual savings accounts, other savings, a defined benefit pension from an earlier job and any part-time earnings all reduce what the pot has to produce. The calculator above lets you enter the income you actually need from the pot, which is where those belong.
What moves the target most
In rough order of size, for the same standard of living: whether you choose a level or an inflation-linked income; the age you stop working; whether the income has to continue to a surviving partner; whether you own your home; and whether you have a full National Insurance record for the State Pension. Investment returns matter enormously while you are saving and not at all once an annuity has been bought, which is the whole point of buying one.
Questions people ask
Does this figure assume I get the full State Pension?
The tables on this page do, at £12,548 a year, which is the full new State Pension rate for 2026/27. It takes about 35 qualifying years of National Insurance to reach it and roughly a third of people receive less, so it is worth checking your own forecast on GOV.UK rather than assuming. Every year short reduces the State Pension by about a thirty-fifth and adds correspondingly to the pot you would need. The calculator above lets you turn the State Pension off or enter your own figure.
Why does the pot needed fall so much if I retire later?
Three effects stack up. The insurer expects to pay for fewer years, which raises the annuity rate. You have fewer years to fund before the State Pension starts. And the pot itself has longer to grow and to receive contributions. Between 65 and 70 those together typically cut the pot needed for the same income by something close to a fifth, which is why a couple of extra working years moves the target more than almost any other single change.
Is buying an annuity the only way to turn a pot into income?
No, and for most people it is not the first option any more. Drawdown leaves the pot invested and you take what you need, which keeps flexibility and anything left over for your estate, but carries the risk of the money running out. A widely quoted rule of thumb suggests withdrawing around 4% of the pot in the first year and increasing it with inflation, which implies a pot of about 25 times the income wanted, though that figure is contested and depends heavily on investment returns in the first few years. An annuity removes that risk entirely in exchange for the flexibility. Many people use both, securing essential spending with guaranteed income and leaving the rest invested.
Do these figures allow for inflation?
The pot figures on this page buy a level income, which stays the same in cash terms and therefore buys less every year. Over a 25-year retirement at 2.5% inflation, a level income loses about 46% of its buying power. Choosing an annuity that rises with inflation removes that problem but starts roughly a third lower, so the pot needed for the same starting income is much larger. The calculator above has both, and switching between them is the single largest change you can make to the answer.
Does the target need to be before or after tax?
It depends what you are trying to cover, which is why the calculator asks. Spending targets such as the Retirement Living Standards are amounts of money actually spent, so they are after-tax figures and the pot needed is larger than a gross target of the same size. The State Pension uses up the personal allowance first, and everything above it, including annuity income, is taxed as earnings, though no National Insurance is due on any of it once you are over State Pension age.
What about a couple with two pensions?
Two people reaching the full State Pension receive £25,095 a year between them before either pension pot is touched, which is why the couple column below needs a smaller pot per person than the single column despite a higher target. The complication is what happens when one of them dies: the household loses one State Pension and, unless a joint-life annuity was chosen, the whole of that person’s annuity income as well, while most of the household bills carry on.
General information, not financial advice, and estimates rather than offers. Check your own State Pension forecast on GOV.UK, read the spending research at Retirement Living Standards, and get free impartial guidance from MoneyHelper, or from Pension Wise if you are over 50. The annuity estimator works the other way round, from a pot to an income, and how annuity rates are worked out explains the model behind both.