Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

How much money do I need in my pension when I retire in the UK?

In 2017, 14,430 people in the UK were centenarians compared to just 2,500 in 1980.

It is predicted that 160,000 people will be over the age of 100 in 30 years’ time*. This increase in life expectancy is causing many people to wonder how long their retirement income needs to last them and how they can avoid spending all of their retirement pot too early.

Most people need around half to two-thirds of their annual salary to live on in retirement. When you retire, you are likely to have already paid off your mortgage meaning your outgoings are likely to be much lower than when you were working. You also no longer have to pay for a commute and your children may already be financially independent.

In 2017 the Office for National Statistics (ONS) said the average retired household now spends £21,770 a year*. It is better to overestimate the amount you will need when you retire as you need to take into account inflation and unexpected expenses such as healthcare costs and possible rises in insurance premiums as you get older.

Find out more about retirement planning

How much State Pension do I get?

If you have contributed to national insurance for 10-35 years you will qualify to receive the state pension. The most you can get per week in the 2019-20 tax year is £134.25. However you are not eligible to receive it until the age of 65, increasing to 66 by October 2020. This amount is unlikely to be enough to cover your expenditure, therefore it is important that you also have a private pension to supplement your income.

A private pension also offers more flexibility when it comes to retiring early as it can currently be accessed from the age of 55.

Is my workplace pension enough?

If you are over the age of 22, employed and earning over £10,000 a year, you will qualify for your workplace auto-enrolment scheme. This will provide you with additional income when you retire.

A percentage of your salary will be paid into your pension directly from your paycheck and your employer will also have to contribute. In the 2020-21 tax year 8% of your salary needs to be paid into your workplace pension with a minimum of 3% coming from your employer.

It is likely that you do not have much control over your workplace pension or there may only be a limited number of investment options in your workplace scheme therefore it may also be worth having a private pension alongside your workplace one

Should I start a private pension?

The earlier you start to save for your retirement, the more time your pension pot has to potentially grow. Saving small amounts monthly can add up to a large pension pot by the time you reach retirement age.

Find out more about starting a pension

Or if you are closer to retirement and have realised that the state pension and your workplace pension are not going to provide you with sufficient income when you retire, you may want to consider starting a private pension plan and saving your excess income into it.

A private pension is one of the most tax-efficient ways you can save for your future as you can take advantage of tax relief of 20%, 40% or 45%, depending on your marginal tax rate, from the government on your savings.

Review your existing pensions

Contact a Financial Adviser at Four Wealth Management today on 0117 973 0500 or email to book a no-obligation meeting to review your existing pensions and create a bespoke retirement plan tailored to you. The initial meeting will last approximately one hour and can be conducted on the telephone, at our office in Bristol or at your home address.


*Source: ONS, 2017

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

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