Quilter has calculated that a single person now needs a pension pot of £682,000 to enjoy a ‘comfortable retirement lifestyle.’
This is a decrease from last year’s figure, primarily due to more favourable annuity rates, the firm said.
UK annuity rates have risen sharply due to rising gilt yields caused by persistent inflation, potential tariff policies, and delays in anticipated interest rate cuts, Quilter noted.
For a couple, the pot required is £772,000, also down on last year.
Quilter said a comfortable lifestyle includes regular dining out, extended holidays abroad, generous clothing budgets and the ability to support family with gifts or financial help.
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The figures are based on the latest update to the Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards, which were refreshed this month.
A single person aiming for a ‘moderate’ retirement lifestyle needs to have built up a pot of £415,000, while a couple needs £418,000.
Jon Greer, head of retirement policy at Quilter, said: “The cost of achieving a comfortable retirement has fallen this year due to favourable annuity rates. While this is a welcome development for savers approaching retirement, it’s likely to be short-lived.
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“As interest rates are expected to fall over the next year, annuity rates will follow suit, meaning the pension pot required to secure the same level of retirement income will increase again.
“Even with this short-term reprieve, the overall cost of a comfortable, or even moderate, retirement remains substantial. These figures serve as an important benchmark for retirement planning, helping individuals understand what’s achievable.
“It’s also worth remembering that these calculations assume retirees are mortgage-free or not renting in later life – an increasingly rare scenario for future generations,” Greer continued.
“And from April 2027, pensions will no longer be exempt from inheritance tax if left untouched at death. Building up a large pot without a strategy could create an avoidable tax liability, making professional advice all the more important.”
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