How much do I actually need to retire?

This article is for general information purposes only and does not constitute financial advice or a personal recommendation. The figures and standards referenced are based on third-party research and may change over time. Everyone’s financial situation is different, and the right approach to retirement savings will depend on your individual circumstances. If you are unsure about any aspect of your retirement planning, you should consider seeking independent financial advice. Tax treatment depends on your personal circumstances and is subject to change.

Only 9% of working-age people are on track for a comfortable retirement. That’s the finding from Pensions UK’s 2026 Retirement Living Standards update – and for most people, it’s a more uncomfortable number than they’d expect.

The standards themselves give a clearer picture of what retirement actually costs. A minimum lifestyle for a single person now runs to around £13,900 a year. A moderate lifestyle costs £32,700. A comfortable retirement requires around £45,400. While around 82% of people are expected to reach the minimum, only 23% are on course for moderate – and fewer than 1 in 10 for comfortable.

The Retirement Living Standards highlight that while many people are on track for a minimum standard of living in retirement, far fewer are expected to reach a moderate or comfortable retirement. For most people, retirement income comes from three sources: the State Pension, pension savings, and cash savings. Understanding how each one works – and where the gaps might be – can help build a clearer picture of your own retirement income.

The State Pension

For most people, the State Pension provides the foundation of retirement income.

The full new State Pension is worth around £12,548 a year in 2026/27, or approximately £241.30 a week.

For couples where both people qualify for the full amount, State Pension income alone comes close to covering Pensions UK’s minimum retirement standard. For single retirees, however, the picture is different.

The minimum retirement standard for one person is estimated at £13,900 a year. That means someone relying solely on the full State Pension would already face a shortfall before accounting for any spending beyond the essentials.

Anyone targeting a moderate or comfortable retirement will need additional sources of income.

Workplace and private pensions

The Retirement Living Standards highlight the important role workplace and private pensions play in helping many people move beyond covering basic living costs towards the retirement lifestyle they want.

Auto-enrolment into a pension has helped millions of people build pension savings, but the latest Retirement Living Standards suggest current contribution levels may not be enough for many people to reach their target retirement income.

That’s particularly relevant for those aiming for moderate or comfortable retirement standards, where pension savings are likely to provide the majority of additional income beyond the State Pension.

The role of cash savings

Pensions are designed to provide long-term retirement income. Cash savings serve a different purpose.

Firstly, they provide flexibility. Unexpected expenses don’t stop when you retire. Home repairs, replacement vehicles or family costs can arise at any stage. Having accessible savings available can help cover these expenses without needing to draw from pension investments at an inconvenient time.

Easy-access savings accounts are often used for this purpose, allowing savers to keep money available while still earning interest. For those looking to earn tax-free interest, a Cash ISA may also form part of that strategy.

Secondly, cash savings can help with shorter-term planning.

Some retirement savings may have a defined purpose and timeline. That could include money earmarked for spending in the next few years or funds intended to support retirement before State Pension payments begin.

In these situations, fixed-term and notice accounts can offer a predictable return while matching the expected timeframe for when the money will be needed.
It’s important to remember that money held in a Fixed Term Deposit can’t usually be accessed before the end of the agreed term, and Notice Accounts require you to give the agreed notice before making a withdrawal. Charges or loss of interest may apply if the account terms are not met.

There is another important consideration. The Retirement Living Standards exclude housing costs because they vary significantly between households. Anyone expecting to rent or continue paying a mortgage in retirement will need to factor those costs in separately.

Having an accessible cash reserve can provide additional resilience against those ongoing expenses.

In Conclusion

Knowing the target is the easy part. The harder question is whether your current savings plan is actually on track to reach it.

A good starting point may be to look at each income source separately: check your State Pension forecast, review your projected pension income, and consider what role your cash savings play. Once you can see the full picture, it’s much easier to spot where the gaps are – and what to do about them. And the latest Retirement Living Standards provides a useful benchmark. If you’re unsure where to start or what steps are right for your circumstances, you may wish to consider seeking independent financial advice.

If you’re thinking about where to keep your cash savings in the meantime, we offer a range of accounts designed for different goals and timelines.

Common questions about retirement savings

How much does the State Pension pay in 2026/27?

The full new State Pension pays around £12,548 a year (approximately £241.30 a week) in 2026/27. To qualify for the full amount, you’ll usually need 35 qualifying years of National Insurance contributions. You can check your State Pension forecast through your Government Gateway account.

What’s the difference between a minimum, moderate, and comfortable retirement?

These are the three standards set by Pensions UK in their annual Retirement Living Standards. A minimum retirement (around £13,900 a year for a single person) covers the essentials. A moderate retirement (£32,700) allows for more financial security and occasional extras. A comfortable retirement (£45,400) includes greater flexibility, holidays, and leisure spending. The figures exclude housing costs, which vary significantly between households.

Do cash savings count as part of my retirement plan?

Yes – though they serve a different role to pensions. Cash savings provide flexibility for unexpected costs, shorter-term goals, and expenses that fall outside regular income. Easy Access accounts are useful for money you might need quickly. Fixed Term Deposits and Notice Accounts can work well for cash you know you won’t need for a defined period, offering a predictable return while your money is set aside.
Money in a Fixed Term Deposit generally can’t be accessed until the end of the agreed term, while Notice Accounts require you to give the agreed notice before withdrawing your funds.

Is a Cash ISA worth using for retirement savings?

A Cash ISA lets you earn interest tax-free, which can be useful if you’re a higher-rate taxpayer or if you’ve already used your Personal Savings Allowance.
Cash ISAs and pensions have different features and tax treatment. For example, Cash ISA interest is tax-free, while pension contributions may qualify for tax relief, subject to individual circumstances and current tax rules.

Are OakNorth savings accounts covered by the FSCS?

Yes. Eligible deposits with OakNorth are protected by the Financial Services Compensation Scheme up to £120,000.

Summary table — Retirement Living Standards, June 2026 (source: Pensions UK)