People in their twenties today will need to save more than £500 a month every month of their working life to afford a “comfortable” retirement, according to a new analysis.
A single person would need £43,900 a year to live comfortably, according to the latest Pensions and Lifetime Savings Association (PLSA) standards, equating to a pre-tax retirement income of £52,220.
Should someone want an annuity – a guaranteed income for life – they would need an overall pension pot of nearly £950,000 to fund a lifestyle including foreign holidays, meals out, and a new car every five years, analysis by financial services company Fidelity shows.
Whilst this seems like a lot, the experts warned that much pension planning is based on outdated assumptions, including the expectation that retirement will only last 17 years.
In reality, many will live far longer – and that longevity is dramatically pushing up the cost of retirement, particularly for younger savers who may spend decades in later life without earnings.
Here, The i Paper takes a look at what it really takes to retire comfortably – and how much you need to save each month to get there.
Someone starting with no savings at age 25 would need to save £524 a month until the age of 68 to build the £948,103 pension pot required for a comfortable retirement, according to Fidelity.
This assumes they want a guaranteed lifetime income and bought their annuity after taking their 25 per cent tax-free lump sum which can typically be accessed from age 55, though this is set to rise to age 57 from 2028.
If someone does plan to use that tax-free lump sum to help fund their income – rather than taking it as a one-off payment – they would only need to build a pot of around £711,078, which would require monthly contributions of £393 starting at age 25.
This also factors in the full state pension, currently £11,973 a year, and is based on current annuity rates of 5.66 per cent.
Ed Monk, associate director of Fidelity, said using tax-free cash to generate income directly “can reduce the total savings target significantly” and still ensure a guaranteed income for life.
If you start at 35, you will need to put £944 away a month
Someone starting at 35 would need to save £944 a month to hit the full £948,103 target – or £708 a month if using the 25 per cent tax-free lump sum for income.
square RETIREMENT How to save thousands in tax by using salary sacrifice - and boost your pension
Read More
Mr Monk said the earlier people engage, the fewer compromises they will need to make in retirement.
He added: “They can mitigate the effect of inflation by increasing their monthly contributions annually in line with their earnings. This will happen automatically for those paying in a percentage of their pay.”
Fidelity’s modelling assumes 5 per cent annual investment growth after fees, and that contributions continue until age 68.
A 45-year-old with no existing pension would need to contribute £1,837 a month to reach the comfortable target, or £1,378 a month if using tax-free cash to generate income.
This steep increase reflects the lost years of compound investment growth – and highlights how costly it can be to delay.
Mr Monk said: “While it may feel daunting, it’s encouraging that people are taking actionable steps to make their vision of retirement a reality.
“Over a third of UK investors plan to invest more this year, and a quarter are doing so specifically to accelerate progress toward long-term financial goals like retirement.”
If you start at 55, you will need to put £4,328 away a month
Waiting until 55 to start saving for retirement would require an extraordinary level of contributions.
Mr Monk said you would need to put £4,328 a month to reach the full target, or £3,246 with tax-free income included.
At this stage, buying an annuity becomes a key focus, especially for those wanting stability in later years.
The cost of living longer
Fidelity has also modelled how longer life expectancy impacts pension requirements.
If someone wants to draw £43,500 per year from the age of 65, rising with three per cent inflation and receive the full state pension, they would still need to draw £32,882 annually from their own savings.
To do that:
A man would need a pot of around £600,000 A woman would need around £640,000. This is because they statistically live longer and so need more funds If that same man lives to 92 instead of 85, his requirement rises to £750,000 With just 2 per cent investment returns, the pot must be £810,000 If inflation rises to 4 per cent, the required pot would be £803,000Mr Monk said: “It’s hard to be precise about exactly how much people need to save now for a comfortable retirement in the future.
“But the longer people live, the more flexibility they’ll need. Many now want the financial option to step back earlier – or to work later, part-time or flexibly – not just for necessity, but for fulfilment.”
Hence then, the article about how much you need to save at each age to afford a comfortable retirement was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( How much you need to save at each age to afford a comfortable retirement )
Also on site :
- BTS Dominates YouTube’s Global, U.S. Charts
- Quest Global est reconnue comme un leader dans le rapport ISG Provider Lens® 2025 Report for Manufacturing Industry Services and Solutions
- NYT Mini Crossword Answers, Hints for Thursday, April 2, 2026