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How Much Does a Married Couple Need to Retire?

    2020 Financial_Simon Garber _Danielle Garber_Southampton IFA_Pension Specialist

    When it comes to planning a comfortable retirement income it might feel like there’s a lot of guesswork involved for couples. There are many unknowns involved like ‘how much does a couple need to retire in the UK’ or ‘how much money does the average couple need to retire?’ plus a consideration to what the average retirement income is in the UK as a benchmark.

    How much does a married couple need to retire? The truth is, the experts can’t agree on what constitutes a ‘good retirement income for married couples’. Estimates on a good pension vary between £10,200 and £42,000 per year. What they can agree on is that the UK state pension isn’t enough to provide an acceptable living standard in retirement as a comfortable retirement income.

    So if even the experts can’t agree, how do you decide what is a good retirement income for you as a couple or good pension amount for you to retire comfortably in the UK?

    How much does a couple need to retire in the UK?

    We’ve collated some of the latest research to help you decide what feels like a comfortable or good retirement income to you. The model below shows expert estimates for a couple’s retirement income requirements based on basic, comfortable and luxury retirement lifestyles. It provides some very loose guidelines to what is often considered to be how much pension a married couple might need to live on comfortably. 

    retirement income estimates for a retired couple including minimum income standards, Which, Fidelity and PLSA estimates for minimum, moderate and comfortable retirement standards

    This chart shows the different estimates of average annual income requirements for retirees, collated from leading industry and government sources. The data is grouped into 3 different lifestyle types – minimum, moderate and comfortable. It shows the wildly varying estimates for how much you’ll need in retirement.


    We wouldn’t recommend anyone uses an average to decide their desired retirement income but they can be a useful starting point in deciding how much you’ll need as a good pension amount.

    Unfortunately, estimates for the average retirement income in the UK vary wildly: In 2017 the Office for National Statistics (ONS) said the average retired household now spends £21,770 a year. According to a smaller survey by Prudential in 2018, the UK average retirement income was £19,900.

    However, figures from the Pensions and Lifetime Savings Association (PSLA) whose members include more than 1300 pension schemes with 20 million members put the UK average retirement expenditure at £12,000 suggesting that average retirement income across the UK could actually be much lower than the ONS and Prudential’s surveys suggest. 

    When it comes to saving for your retirement, it’s best to overestimate how much you’ll need when it comes to money, it’s always better to have more rather than less than you need. As in later years, you may not have the earning ability or options you once had to top up your income. 


    Research by the PSLA showed that spending levels vary greatly between pensioners varies. Those in the bottom 20% typically spend £9000 a year, whilst those in the top 20% for income spend nearly three times more (£25,000 per year). Average spending in retirement across all households is £12,000.

    The UK average household income is £28,400 (2018, ONS).  What is obvious from the PSLA and Prudential figures is that many people are surviving on much less in retirement than they would have prior to retiring. 

    Download our Definitive Guide to Comfortable Retirement today for more information about how much couples need to retire comfortably and some simple calculation you can use to start your retirement planning.


    Comfortable Retirement Guide link


    What’s becoming obvious for many married couples is that the UK state pension may not be enough to provide them with a comfortable standard of living in retirement.

    Research from The Joseph Rowntree Foundation looks at what working age adults and pensioners say is needed for an acceptable standard of living. The Minimum Income Standard (MIS) is based on what people think UK households need in order to meet material needs such as food, clothing and shelter as well as to have the opportunities and choices required to participate in society. The figures are updated every few years to reflect current lifestyle standards and inflation.

    The research shows rising retirement living costs over the last 10 years, even when adjusted for inflation, have risen as expectations for minimum retirement living standards have changed.

    It’s worth noting that current state pension provision allows a retired couple who are both in receipt of the full state pension to meet these minimum income standards, but a single person would fall short by £1,650 every year.

    minimum income standard JRF

    A Single Person receiving the Full State Pension will be £1,650 short of the Minimum Income Standard each year


    Most couples would agree that a ‘good retirement income’ is one that offers them security, that allows them to participate in the activities they want to do and provides them with a comfortable enough standard of living to be happy.

    Research by the National Employer’s Savings Trust (Nest) in 2014 stated that £15,000 was the income level where retirees begin to feel comfortable and more secure. Adjusted for inflation that’s about £16,350 in today’s money.

    The 2014 report stated that reported levels of well-being rise significantly once retirees earn between £15,000 and £20,000 but there is no happiness benefit above £40,000 a year. 

    Royal London put their ‘comfortable’ retirement income at £17,500 a year. With the current UK state pension providing just over £8500 a year, according to this, the average person retiring at state pension age will need to add over £9,000 a year to top up their state pension to a comfortable income level.

    Sustaining your current living standard

    The Pension Commission use a measure known as the Target Replacement Rate, also known as the ‘two-thirds rule’ as a retirement planning tool. It is a simple tool that tells you what percentage of your pre-retirement income you will need to sustain your current standard of living in retirement.

    As a general rule of thumb for anyone earning over £17,500 (bearing in mind that the current UK average salary is £28,028*), you’ll need between half and two-thirds of your pre-retirement income. For high earners, it assumes that in retirement you’ll need 50% of your pre-retirement earnings

    Target Replacement Rate

    Target replacement rate table

    Renting in Retirement

    It is important to note that the Target Replacement Rate measure assumes that you will have paid off your mortgage by the time you have retired. If this is not going to be the case for you, or you are renting, you’ll need to factor the additional costs into your sums.

    A report commissioned by Royal London estimates that a third of retirees will eventually be renting and that they would typically need to find £6,554 extra a year to pay private landlords. 

    In the UK average rental prices have risen every year for the last 10 years, with rents rising by up to 30% in that period in London. The Royal Institution of Chartered Surveyors (RICS) predicts that UK rents will rise a further 15% by 2023. Retired renters with a fixed income, will need to plan ahead to make sure they can afford these increased costs.

    Need help getting your retirement plans on track? Arrange your free introductory call with an Independent Financial Adviser today. Call us now to schedule 02380 981161

    Retirement targets made easy

    Australia leads the world with its Retirement planning targets. Their simple system outlines 3 distinct retirement lifestyle options contrasting a modest and comfortable retirement with the choices available to you if you claim the Australian Age Pension (equivalent to the UK State Pension). You can easily see how much your desired lifestyle will cost you in retirement and plan accordingly.

    The retirement budget is based on a wide range basket of goods and services and is allocated in 11 groups: Food, Alcohol and tobacco, Clothing and footwear, Housing, Household contents and services, Health, Transportation, Communication, Recreation, Education, Financial and insurance services

    Whilst no UK equivalent exists for the Australian target system, there are a couple of examples that attempt to model it. Consumer group Which? Have published research showing average spending in retirement. It groups individuals into three retirement lifestyle targets – luxury, comfortable and basic.

    Basic Retirement Lifestyle

    A basic retirement lifestyle, is exactly that. It covers the essential, housing, heating and food. But there’s no money for meals out with friends, no foreign travel, basic clothes and you’ll only be able to take part in free or very low-cost leisure activities.

    Comfortable Retirement Lifestyle

    If you want to enjoy the occasional meal out, and the odd holiday or two to Europe, you’ll need to save for a comfortable retirement. A comfortable retirement for married couples allows for running a car (albeit not a new one) and you’ll be able to take part in regular leisure activities.

    Those surveyed by Which reported that a comfortable retirement lifestyle for a couple cost them £27,000 a year or around £2,250 a month per household. N.B. Figures stated are all net of tax.

    Luxury Retirement Lifestyle

    Those dreaming of a luxury retirement lifestyle with extended World travel and more frequent trips away will be looking at an average retirement spend of £42,000 per couple. With a luxury lifestyle, retirees were able to enjoy regular meals out, a new car every 5 years, things like golf and gym memberships and fine wines.

    Of course, these are merely averages taken from a fairly small research pool (6000 people), and they’re based on couples spending, if you’re a single person planning your retirement, your retirement cost will be different

    Couple retirement cost Estimates provided by Which Research 2020

    These figures are backed by financial planner Tilney who found a similar picture: it said newly retired couple households (aged 65-plus) spend £26,500 each year until they reach 75.


    According to Which? if you’re a couple aiming for a comfortable retirement with a post-tax income of £26,000 a year you’ll need a pension pot of nearly £210,000. (assuming you retire at State Pension age, opt for an annuity and are both in receipt of the full state pension).

    Using the same assumptions, to fund a luxury retirement with a post-tax income of £39,000, you’ll need an initial pension pot of around £550,000.

    A 30-year-old saver looking to generate a pension income of £26,000 a year would need to start saving £198 a month. At 40, if you’ve not started saving yet, you’ll need to put £338 away a month and if you’re 50 it goes up to £633. However, if you already have pension savings, you may only need to top them up, which means you won’t need to save quite so much to bridge the gap.


    How much a good pension is will depend very much on your own circumstances and plans.

    If these figures seem daunting, remember, the examples given provide a comfortable retirement income for a couple. If you are both working then you’ll have two sources of income and therefore twice the savings ammunition. Plus, you may be able to top up your pension pot with money from savings and other assets such as downsizing your home and there can be other ways to make it work. Your dream retirement might not appear as unrealistic as you think… 

    Need help getting your retirement plans on track? Arrange your free introductory call with an Independent Financial Adviser today. Call us now to schedule 02380 981161

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    Simon Garber

    Simon Garber

    Simon Garber, DIP PFS, runs 2020 Financial Ltd. He's an Independent Financial Adviser and Pension Transfer Specialist with over 20 years of experience. He's FCA registered, a member of the Personal Finance Society and holds the coveted Gold Standard for Defined Benefit Pension Transfer Advice.

    He is the Managing Director of 2020 Financial Ltd, Financial Advisors specialising in Retirement Planning & Wealth Management, based in Southampton, Hampshire.


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