The most common question in UK personal finance. The answer depends on how much you plan to spend, when you want to retire, and how much state pension you'll receive. Here's how to work it out.
The PLSA Retirement Living Standards
The Pensions and Lifetime Savings Association (PLSA) publishes annual figures for what different retirement lifestyles cost in the UK:
Minimum
£14,400/year
Cover all needs, some leisure. No car, limited holidays.
Moderate
£31,300/year
More financial security, one foreign holiday per year, a car.
Comfortable
£43,100/year
More financial freedom, regular holidays, replacing car every 5 years.
Source: PLSA Retirement Living Standards 2025/26. London costs approximately 30% more.
How the state pension changes your number
The full new state pension is £11,502/year (2025/26), paid from age 67. You need 35 qualifying National Insurance years to receive the full amount. Check your NI record on HMRC's website to see your forecast.
If you plan to retire at 67 or later, the state pension significantly reduces the pot you need:
| Lifestyle | Total needed | State pension covers | Portfolio needed |
|---|---|---|---|
| Minimum | £14,400 | £11,502 | £72,000 (×25 of gap) |
| Moderate | £31,300 | £11,502 | £495,000 |
| Comfortable | £43,100 | £11,502 | £789,000 |
Retiring before 67: you need more
If you retire at 55, you face 12 years without state pension. That gap costs you roughly £138,000 extra in today's money (12 × £11,502). The portfolio you need is correspondingly larger — and you can't access your SIPP until 57.
The 4% rule in a UK context
The 4% safe withdrawal rate (SWR) says you can withdraw 4% of your portfolio each year and statistically not run out of money over 30 years. UK-specific considerations:
- •UK historical equity returns slightly lower than US — some UK planners use 3.5% SWR to be conservative
- •A globally diversified index fund portfolio (FTSE All-World) reduces single-country risk
- •Sequence of returns risk is highest in the first 5 years — keep 1–2 years of spending in cash as a buffer
Don't forget these retirement costs
- →Care costs: average UK care home £60,000/year — worth considering long-term care insurance
- →NHS: free at point of use, but dental and optical costs in retirement add up
- →Property maintenance: budget 1% of property value per year
- →Inflation: at 2.5%, your purchasing power halves every 28 years
Use our UK retirement calculator to get a personalised figure based on your spending, current savings, and projected state pension.