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Are you and your partner on track for a happy retirement?

Knowing how much income you'll need to retire and whether you've saved enough can be tricky to work out – especially if there are two of you to think about. Here are some top tips to help.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Lots of people spend much of their working lives looking forward to their dream retirement. But industry research suggests that 77% of savers don’t know how much income they’ll actually need. And only 20% are confident they’re saving enough.

When it comes to planning retirement with your partner you first need to work out if your goals are the same, and if you’re both saving and paying enough into your pension pots.

Remember this article isn’t personal advice. If you need personal advice on reaching your retirement goals, please speak to a financial adviser. Remember you can’t usually access the money in your pension until you’re 55 (57 from 2028).

How much money do you need to retire?

Most people’s idea of a comfortable retirement will differ, depending on what lifestyle you’re accustomed or aspire to. But to help simplify saving for retirement, the Pensions and Lifetime Savings Association (PLSA) recently launched the retirement living standards, which we think are a good guideline.

These have been designed to help people picture what lifestyle they want in the future, and how much income they’re likely to need to achieve that lifestyle.

It includes three living standards – minimum, moderate and comfortable.

Scroll across to see the full table.

Minimum Moderate Comfortable
Single £10,200 £20,200 £33,000
Couple £15,700 £29,100 £47,500

Source: Retirementlivingstandards.org.uk. Data accessed 12 May 2020. Please note this isn’t personal advice, and these figures might not suit what you have in mind for your retirement and could change over time. You can find out more about what they think is minimum, moderate and comfortable here. Note that the amounts required are higher for those living in London.

Reaching a comfortable living standard

As you can see from the PLSA data, a comfortable living standard for couples (living outside of London) in retirement would cost around £47,500 a year. Which, for many people, could be higher than expected and actually a challenge to achieve.

The minimum auto enrolment amount (the minimum you need to pay into a workplace pension) is 8% of qualifying earnings including an employer contribution of at least 3%. And although industry research shows that 51% of savers believe the minimum auto enrolment amount is enough to hit this comfortable standard, this isn’t likely to be the case.

For example, let’s say you and your partner are in your 30s. A 35 year old, earning £46,000 annually, who’s already built up a pension pot of £50,000, would still need to pay 19% of their salary and their employer pay 4% into their pension each year starting today. But also be entitled to the full current state pension (which might change in future) to achieve a comfortable living standard just for a single person, by the time they reach retirement age (currently 68).

This example assumes an average investment growth rate of 5% after charges and a 3% inflation rate. They don’t take into account changes to salary and of course there are no guarantees. Pension and tax rules can and do change, and benefits will depend on your circumstances.

How much pension might I get?

Depending on your situation, retirement might be just around the corner, or a distant dream. But regardless of where you are on your journey, there’s no time like the present to make sure you’re heading in the right direction.

Take a moment to check how your current pensions are doing. This includes any old pensions you set up with previous employers. For any pensions you’ve lost touch with, you could use the government’s pension tracing service to help track them down.

Find out more on how to track down lost pensions

Our budget and pension calculators can help you work out how much your pension might be on track to pay (including how much state pension you could get). But also whether your spending plans might need to change.



Retirement planning – what you can do now

  1. Get talking

    Firstly, be as open as you feel comfortable with your partner. If you understand each other’s goals and expectations, you’ll know how to support one another better. Consider using the tools we’ve provided above to get an overview of your combined financial situation.

    Then you need to discuss how much you need to save, and by when. If you know these things then you can begin to get your finances fit for retirement.

    More about retirement planning

  2. Increase your contributions – if you can, when you can

    If you’re many years away from retiring, you might have more time to save. So you could consider increasing your pension savings gradually in order to hit the comfortable retirement threshold. But start as early as you can.

    Older savers might want to pay in or divert larger chunks of their earnings to max out their savings for when work stops, all the while taking advantage of tax relief.

    No matter how much tax you pay, as long as you’re under 75 and resident in the UK for tax purposes, you’ll automatically get a 20% top up. This is in the form of basic rate tax relief from the government on contributions you pay into a pension.

    You might also be able to claim even more through your tax return if you pay tax at a higher rate. You should ensure that you don’t contribute any more than 100% of your earnings after tax relief has been received, or £3,600 if this is greater. Contributions are also subject to an annual allowance of £40,000, although this might be lower for higher earners or those who have accessed a pension.

    You can find out how much tax relief you could be entitled to by using our tax relief calculator.

    Tax rules can change and benefits depend on personal circumstances.

    How tax relief works

  3. Find out where you’re invested and if your pension could be working harder

    Lots of workplace pensions are invested in a ‘default fund’ – a one-size fits all scheme which usually makes investment decisions on behalf of members according to their age. This normally assumes that people the same age will retire at a similar time.

    For some this is the right place to be invested. But on the other hand, the very fact that it’s a one-size fits all solution means it’s unlikely to be the perfect fit for many.

    If this is the case for you, the first thing to do is to get in touch with your workplace pension provider. You might be surprised to know that you don’t actually have to change pension provider to move out of a default fund.

    In fact, most workplace pension providers should allow you to change from the default fund to a more adventurous fund for example. Or, if you’re thinking of accessing your pension soon, you could consider switching to a more conservative fund.

    Remember all investments, including default funds, can go down as well as up in value so you could get back less than you invest.

  4. Get personal advice if you need it

    There's a lot to consider as you approach retirement – how you’ll spend your time, where you might live, and how to fund the next stage. Our financial advisers can work with you to develop a personal retirement plan you can be confident with.


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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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