This is how much money you really need in your pension pot to be able to retire

Does sipping cocktails and sailing around the seas on a luxury cruise sound like your perfect picture of retirement? However much you love your job, chances are that you're not planning to work for the entirety of your life and you've spent an hour or two daydreaming of your life without work when you retire. 

The challenge facing us today is that not all that long ago, working hard in a stable career would set you up for retirement financially. But times have changed and today, it's more important than ever to take control of your financial future and set yourself up for retirement as soon as possible. Here's a quick guide to what you need to know about retirement in 2025.

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How much do I need to save for retirement?

The amount of money you need in your retirement fund to stop working depends on your lifestyle and your expectations for how you plan to spend your retirement. To determine a ballpark figure, it's helpful to think about the way you imagine living in retirement, as the amount you need will vary hugely depending on your plans for travel, socialising and more.

Take holidays as an example: if you plan to travel abroad several times a year during retirement, the target figure for your retirement fund will be significantly higher than someone aiming for one week by the seaside each year. 

To help put a figure on the cost of retirement, the Pensions and Lifetime Savings Association (PLSA) categorise retirement into three levels - minimum, moderate and comfortable - each of which factors in various lifestyle expectations to estimate the cost of retirement per year. 

As it currently stands, the minimum lifestyle costs around £14,400 per year for a single person, with the moderate lifestyle coming in at £31,300 and comfortable retirement at £43,100 per year. 

What can I do to boost my pension pot?

If the numbers are sounding scary and you’re stressing that your aspirations to sail off into the sunset on a monthly cruise are at risk, don’t panic. There are plenty of things you can do to get on top of your pension planning and boost your pot to get you closer to your target figure. 

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First things first, spend some time making sure you have a clear idea of how much you currently have in your pension overall. If you’ve worked for multiple employers, you’re likely to have pensions in different places, so take the time to pinpoint them. You may want to consider consolidating your pensions into one pot to save on paperwork, so speak to your current pension provider to explore that option. 

If you are employed and enrolled in your workplace pension scheme, find out how much you currently contribute to your pension each month and check your employer contribution too. 

Many employers will offer to match your contributions up to a certain amount, so increasing your pension contributions can be a tax efficient and simple way to save more for your retirement. Don’t be afraid to speak to your HR team or contact your pension provider directly if you need more information or support; after all, your pension is your hard-earned money. 

Can I live off the State Pension in retirement?

The State Pension provides a regular income during retirement once you reach a certain age, however, it’s key to note that the age when you can claim State Pension is far higher than the age at which you can withdraw a private pension. 

Currently, you can take a private pension from age 55 (increasing to age 57 in 2028), however, you are not eligible for the State Pension until between age 66 and 68, depending on your date of birth. 

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The amount of State Pension you receive depends on your National Insurance (NI) contributions throughout your life. To be eligible for the State Pension, you must have at least ten qualifying years of NI contributions, with 35 years required to get the full amount of the State Pension.

Remember, though, that even with the full 35 years, it’s unlikely that the State Pension will provide you with sufficient income alone to live off. 

Where can I find more information?

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For details on the State Pension, head to the gov.uk website. If you have specific questions about your workplace or private pension, funding your retirement or saving for the future, contact an Independent Financial Advisor for more information and support.

Ellie Austin-Williams is the author of Money Talks, a Lifestyle Guide for financial wellbeing. Find her on Instagram at @thisgirltalksmoney.