Skip to content

What size pension do I need for a moderate retirement in the UK?

What size pension do I need for a moderate retirement in the UK?

If you’ve ever wondered ‘what size pension do I need to retire in the UK?’, chances are you’re thinking about a moderate retirement lifestyle. Something more than the minimum amount of money needed to retire, but not a big enough pension for e lavish retirement.

The Pensions and Lifetime Savings Association (PLSA) estimates that a moderate lifestyle in retirement would require an annual pension of £31,300  for a single person and £43,100 for a couple.

But let’s take a look at what a ‘moderate’ lifestyle in retirement might look like according to the PLSA. Because your idea of moderate living could be more or less comfortable than that of the PLSA.

What does retirement with a moderate sized pension look like in the UK?

In addition to covering life’s essentials, the PLSA describes a ‘moderate’ retirement in the UK as providing greater financial security and flexibility. This offers more opportunities to do things you really enjoy compared to a minimal retirement lifestyle. Although still less than is afforded with a comfortable retirement lifestyle.

HOME CARE

In addition to bills and insurance being covered, you can have a boiler servicing and cover plan. You’ll also have a budget of £500 a year for decorating and maintenance, which can allow for some professional help as projects pop up every few years.

FOOD & DRINK

You’ll have around £55 a week for groceries, buying a mix of branded and own-branded goods from mainstream supermarkets. If you fancy a tipple, you can pick up an £8 bottle of wine and 3 cans of beer a week. When you don’t fancy cooking, you’ll have £30 a week to grab food away from home, and £10 a week for your favourite takeaway. You can even treat family or friends to a meal out, up to £100 a month, if you feel generous.

TRANSPORT

Having a big enough pension to fund a moderate retirement lifestyle in the UK should cover one used car per household. It will be about three years old when you buy it, and you can look to replace it every 7 years. When you don’t want to use the car, you’ll have about £20 a week for taxis, and you can take 1 or 2 long distance train rides to visit family or a new part of Britain you want to see. Plus, your bus pass is still handy to have.

HOLIDAYS

How does a 2-week all-inclusive trip to the Mediterranean sound? Followed by a long weekend somewhere in the UK? Well, having a big enough pension to enjoy a moderate retirement in the UK should cover for both of these trips. You’ll have around £1400 for holidays each year. Balancing the time of year and hotel ratings will help too.

ENTERTAINMENT

At home you’ll have the basic TV channels and standard broadband, but you’ll also and you can pick your two favourite streaming services e.g. Netflix, Prime Video etc. You’ll also have £40 a week to cover two or three leisure activities, like a trip to the cinema or the football.

CLOTHING & PERSONAL CARE

This is an area we see a substantial step up from only having the minimum pension you need to retire in the UK. With a moderate retirement lifestyle you will have £1,000 a year for clothes and £500 for shoes. Dental care will still be NHS, and glasses remain in mid-range pricing. However, you can now spend up to £100 on hair dressing and £50 on beauty treatments every six weeks which is far more than the minimum allows.

TREATING OTHERS

Having enough pension to fund a moderate retirement in the UK also allows you to spoil the people in your life a little more. On average, you’ll have £30 a month to cover birthday gifts, plus £30 per gift at Christmas for up to 12 friends and family. Throughout the year, you’ll have another £1000 to spend on supporting friends and family as you see fit, and you can donate up to £200 a year to your favourite charity.

MODERATE RETIREMENT NOT FOR YOU?

If a moderate retirement still sounds too restrictive to you, check out how you can enjoy a more comfortable retirement here:

How much do I need to for a comfortable retirement in the UK?

Or, if you’re wondering what a minimum retired lifestyle looks like, perhaps so you can retire sooner, find out here:

What is the minimum pension I need to retire in the UK?