How Much You Need to Save for a Comfortable Retirement

New research from consumer champions Which? suggests that in order to secure a comfortable retirement you need to save £130 a month for 40 years

Emma Wall 19 April, 2017 | 2:43PM

What annual salary do you need in retirement in order to feel comfortably off? According to a new survey from consumer champions Which? retired couples need £18,000 a year in order to cover essential expenditure. The house essential outgoings include food, energy bills, transport and housing costs, but if you want a few added extras thrown in – such as an annual holiday in Europe, a few drinks in the pub on the weekend and the odd leisure activity – and the annual requirement grows to £26,000.

Which? calculates that to generate an annual income in of £26,000 retirement, a couple will need a pension pot of £210,000, coupled with the current flat-rate State Pension of £155 a week. Based on the current retirement age of 67, a couple aged 20 should save £131 a month to reach this pension pot goal.

However, if you put off saving for retirement by 10 years this monthly sacrifice rises to £198 a month. Wait until you are 40 and you will need to save £338 a month between you to reach the £26,000 annual income goal. Those savers who do not start saving for retirement until they are 50 will have to put away £633 a month – or £316.50 each – in order to secure a comfortable retirement.

Gareth Shaw, at Which? said: “When it comes to saving for your retirement: start early and save often. Being a part of your company pension scheme is a good start, but, depending on how much you contribute, you could well need to save a little more to have the lifestyle you want in retirement.”

Discretionary Spending of Retired Households

According to separate survey by financial planning firm Tilney released in February, newly retired households spend £26,500 each year until they reach 75. Tilney’s report, which analysed of Office of National Statistics (ONS) Family Spending data, found that the among the discretionary purchasing of retired workers, restaurants and takeaways were the biggest outgoing at nearly £2,000 a year. Couples spent a similar amount on holidays every year and £620 on alcohol.

“Over the course of retirement, a typical retired household spends £99,500 on having fun, with £41,000 on holidays, £36,000 on entertainment and £22,000 on restaurants; a third keeps a roof over their heads. For the wealthiest 25%, only a quarter is spent on housing at £192,000, with £182,000 on having fun, of which a remarkable £74,000 will be on holidays,” the report reads.

“One in sixteen households, those that have made the greatest financial provision for later life, can anticipate £1 million of outgoings over the course of retirement. For this wealthiest 6%, their £410,000 spending on entertainment, holidays, restaurants and cars roughly equals the average retired household’s entire lifetime budget.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Emma Wall

Emma Wall  is Senior Editor for