The true cost of retirement

This content was reviewed and approved by Marc Perry.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

Looking forward to retirement? Unsure how much money you’ll need to achieve a comfortable lifestyle? You’re not alone.

Discovering the true cost of retirement will help you understand if you’re ready to retire, what you’ll need to save, and how to get there. From weekly expenses to retirement and pension advice fees, find out the true cost of retirement in our helpful guide.

What are your retirement goals?

With average UK life expectancy for men being 79 years and women 83 years, your pension may need to stretch further than you think.

The first step to effective retirement planning is to set your retirement goals. You may want to travel, buy a new car, or move house. Or perhaps you’d prefer a relaxing, modest retirement after a long working career.

Whatever your preference, it’s important to clearly understand how much you’ll need to fund your retirement. Could you afford to chase your dreams if you retire tomorrow? Maybe you’re considering a pension annuity that guarantees regular payments throughout your retirement years. Seeking professional retirement and pension advice can help you prepare for one of life’s major milestones.

What is the cost of retirement?

The true cost of retirement depends on your individual circumstances, lifestyle goals and financial needs. For example, a two-person household will require nearly £22,000 in annual retirement income to achieve a minimum standard of living. The figure for a single-person household is £13,400.

This guide follows the same three retirement living standards set down by The Pensions and Lifetime Savings Association – minimum, moderate and comfortable.

• Minimum standard: Enough money to cover your basic needs with some left over to spend how you choose.
  

• Moderate standard: More financial security and flexibility than the minimum standard.
  

• Comfortable standard: Greater financial freedom and money to spend on occasional luxuries.

All three standards are based on the cost of common goods and services over time and in line with inflation. These include home maintenance, holiday and leisure, transport, food and drink, clothing and helping others like friends and family.

It covers the potential annual costs for both retired couples and individuals. The amount needed can change over time based on rising living costs, inflation and other factors. For instance, the cost of achieving a comfortable retirement has climbed from £43,100 to £43,900 for a single person in the past few years.

What is the cost of retirement for couples?

Whether you’re married or living with a long-term partner, the following estimates will help you decide how much pension income you need each year to achieve the retirement lifestyle you want as a couple.

These figures are based on data produced by the Pensions and Lifetime Savings Association and should not be taken as financial advice, and do not represent gross retirement income figures.

What is the cost of retirement for single people?

If you’re single and maybe living alone, you’re likely to need less money to fund your retirement than most couples.

Again, these figures are based on Pensions and Lifetime Savings Association data and should not be taken as financial advice, and do not represent gross retirement income figures. Here’s what your retirement expenditure may look like as a single person:

What else should be factored into the cost of retirement?

Everyone has a different view of retirement. The amount of money you’ll need to fund the lifestyle you want depends on several factors including:

• The age you retire.
  

• How you decide to take your pension money.
  

• Any other savings and investments you have.
  

• Everyday living expenses.
  

• Other family commitments or financial dependents.
  

• Your financial dependents.

• Whatever standard of retirement living you’re looking to achieve, you’ll need to save and plan for it now. You can check how much State Pension you’ll receive when you reach the age of 66 (rising to 67 between 2026 and 2028). You may have other savings, investments, private pensions and annuities to call on to boost your retirement income.

Retirement doesn’t necessarily mean giving up work for good either. Many people want to keep working when they reach State Pension age, and around one in six over 55s (the age at which you can currently draw from your private pension) in the UK choose to unretire and go back to work, whether full-time, part-time or self-employed.

What is the cost of retirement and pension advice?

One of the best ways to plan for retirement is to seek professional retirement and pension advice. You’ll be paying for the expertise of qualified advisers who’ll guide you through your options and help you get maximum value from your retirement savings.

The cost of pension and retirement advice depends on the type of pension, your retirement goals, the advice you choose and other factors. For example, professional and affordable advice from LV= starts from as little as £995.

You can also explore your options by booking a friendly, commitment-free chat with one of our retirement experts. You won’t pay any fees until you agree to one of the services. There are several flexible payment options such as deducting the fees from your pension savings or making a single, one-off payment.

You can buy an annuity without professional financial advice, but it’s worth noting, you’ll still be charged commission to cover the arrangement fee which is taken from your pension pot.

Ultimately, getting the right retirement advice can boost your pension pot and offer genuine value for money for a minimal investment. It can ensure you live comfortably and have enough money to live on to enjoy retirement to the full. Not only that, but the advice you receive will consider your tax position to ensure you’re taking your pension pot in the most tax-efficient way.

Are you prepared for the cost of retirement?

It’s never too early to start thinking about retirement. The earlier you start saving into a pension, the bigger your pot could be when you finally retire. But with so many different types of pensions, annuities, and other investment related products like drawdown to consider, choosing the best option for you can be difficult.

Need support with preparing for retirement?

Our retirement and pension advice service takes the confusion out of retirement planning. Our expert advisers can help you get the most out of your pension savings. Request a call back today to get your pensions ready for the retirement you want to enjoy.