You need £285,000 for a comfortable retirement

Those who want a ‘comfortable’ retirement need more than half a million pounds to generate the income required. These are staggering sums, especially since they assume savers also qualify for the full new state pension. Those who face a shortfall will have to save even more. These figures are courtesy of pension specialist Standard Life, based on research by the Pension and Lifetime Savings Association. The PLSA calculates that retirees need £12,800 a year as a bare minimum, and that was before the cost-of-living crisis. This would cover the bare essentials plus one week’s holiday in the UK. It would not stretch to a car, which most people see as a fundamental need. The full new state pension currently pays a meagre £10,600, which is £2,200 below the bare minimum required. Many pensioners get a lot less than that. Generating that extra £2,200 would require around £50,000 of company and personal pensions, or other savings such as cash in the bank or tax-free Isas. A moderate retirement living standard requires income of £23,300 a year, which is £12,700 more than the maximum state pension and requires a total savings pot of £285,000. This level of income could cover car ownership and one foreign holiday a year, plus the odd meal out. To be comfortable, enjoying regular holidays and meals out, you need income of £37,300 a year. That’s £26,700 above the state pension and requires a hefty £530,000. The sums look daunting but at least give savers a target, said Dean Butler, managing director for retail direct at Standard Life. ‘Individual circumstances will vary and life costs less in some parts of the country.’