An older couple sat on a bench overlooking a sandy beach.

Local independent financial adviser, Becky Hammonds of Willow Financial Solutions, examines how much you need to save to fund a moderate standard of living in retirement.

Given the rising cost of living, many people are headed towards a nasty surprise in their old age, having failed to save enough for a proper pension.

How big should a pension pot be?

Industry body the Pensions and Lifetime Savings Association (PLSA) recently published a set of ‘retirement living standards’ to give savers a clear idea of how much they will need. Visit: for more information.

Currently, the retired life expectancy of a 65-year-old man is 18.6 years and a woman of the same age can expect to live another 21 years, meaning pension pots have to last roughly two decades. Annuity rates slumped to a record low a few years ago but they have rallied. To give savers an idea of how much their pension pot could provide, imagine a 65-year-old with a £50,000 pension pot will now receive an annual income of just £2,298.

The minimum standard — an income of £10,900 a year for a single person or £16,700 for couples — means you will only be able to afford coach-trip holidays and will have to buy supermarket own-brand products perhaps looking to spend around £40 a week on food. However, the full state pension for 21/22 is £9,339 so you are on your way, providing you are entitled to a full state pension. 

On this sort of income you won’t be able to afford to run a car and will have to rely on your free bus pass.

Meanwhile, a moderate income of £20,800, or £30,600 for couples, will allow you to take a short holiday in Europe every year and drive a second-hand car.

And a comfortable retirement income of £33,600 — or £49,700 for couples — will allow you to use your own car and spend over £60 per week on food. 

You will also be able to afford a decent holiday in Europe.

This means a couple will need combined pension savings of well over £1 million to afford a ‘comfortable’ lifestyle. The income guidelines also assume that you will have paid off your mortgage.

However, bear in mind that you are not obliged to use all or indeed any of it to buy an annuity.

An alternative approach would be to take small amounts from your pension pot in retirement through a process known as ‘drawdown,’ to help with day-to-day costs, leaving the rest to be invested and hopefully grow further.

An independent financial adviser can help you to assess your retirement needs and direct you on the best path to take.

For more information contact Becky Hammonds on 07969 269677 or email