How true are recent media headlines that fewer than one in ten will enjoy a comfortable retirement?
As meteorological summer started with heavy rain, a further dampener was put on proceedings by a storm of media headlines thundering that only 9% of people could look forward to a ‘comfortable’ retirement. As is often the case with shock-horror statistics, the reality is rather more nuanced.
Decoding the Retirement Living Standards Report
The gloomy coverage was prompted by a Retirement Living Standards (RLS) report from Pensions UK, a trade group for the retirement savings industry. The RLS report, which has been published each year since 2021, is an attempt to show the costs of retirement (excluding housing costs) for single-person and two-person households.
The Three Tiers of Retirement Living
The report measures retirement preparedness based on three distinct standards of living:
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Minimum: Defined as “Covers all your needs, with some left over for fun.”
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Moderate: Defined as “More financial security and flexibility.”
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Comfortable: Defined as “More financial freedom and some luxuries.”
The headlines related strictly to the top-tier category. An alternative banner of ‘Over four in five on target to reach a Minimum standard of living in retirement’ would have been equally accurate, but far less attention-grabbing.
The True Cost of a ‘Comfortable’ Lifestyle
The reason for the large gap between the Minimum and Comfortable groups becomes obvious when you examine the yearly costs assessed by Pensions UK, in conjunction with Loughborough University.
Annual Retirement Costs (Excluding Housing)
| Living Standard | One-Person (UK) | One-Person (London) | Two-Person (UK) | Two-Person (London) |
| Minimum | £13,900 | £14,600 | £22,500 | £24,100 |
| Moderate | £32,700 | £34,000 | £45,400 | £47,000 |
| Comfortable | £45,400 | £47,200 | £62,700 | £64,800 |
Source: Pensions UK. These amounts exclude housing costs, meaning that if you rent or still have a mortgage to pay in retirement, you would need to budget for significantly more.
Crunching the Numbers: Income vs. Reality
Pensions UK calculates that for a single person living outside London to achieve the Comfortable level requires a pre-tax income of £54,720—more than enough to make them a higher-rate taxpayer anywhere in the UK. For a two-person household, Pensions UK puts the gross income needed as £36,045 each (£72,090 in total).
The State pension in 2026/27 is £12,548 a year, meaning that reaching the Comfortable tier requires a significant amount of private pension and/or investment income. But before you think you can easily make do with the Minimum, remember that summer rain and the fact that the bottom-rung retirement level assumes only a single week’s UK holiday.
Secure Your Financial Future with Chartwell Wealth Management
Sensationalized headlines are designed to scare, but achieving the retirement lifestyle you actually want comes down to clear, strategic planning. At Chartwell Wealth Management, we help cut through the media noise to design a bespoke retirement strategy tailored specifically to your goals. Whether you are aiming for a comfortable retirement or simply looking to maximize your existing investments, our team is here to guide you every step of the way.
Don’t leave your retirement to chance. Contact Chartwell Wealth Management today to schedule a consultation.
Disclaimer: The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits.
