An average saver wants more than £30,000 a year to live on in retirement, according to a new study – but their pension pot will only give them that income for just over a decade before they run out of money.
A survey of 3,000 UK consumers found the average personal ‘target’ pension pot for retirement is £253,701.
Yet the average ‘target’ for personal annual income in retirement is £30,050 (up from £25,679 in 2023), according to the report by independent consultants Retirement Review.
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We look at the average pension pot by age in a separate article.
The reality is their target pension pot would likely provide their target retirement income for just 11 years, assuming no lump sum taken and a balanced portfolio with average growth.
Given the average age respondents expected to retire was 65.7 years, this would see them run out of money by age 77.
Alternatively an annuity would give them an income of £19,391 a year. That is a gap of 35% below their income expectation.
Matthew Morris of Retirement Review, said consumers “are badly underestimating the amount they need to save in order to achieve the retirement they want”.
Once retirees reach state pension age, they can expect their income to increase, by as much as £11,973 a year based on current entitlements – assuming they qualify for the full new state pension.
“This highlights the value of ensuring savers have the right number of qualifying years in their state pension,” the report’s authors point out.
A large minority of pension savers just don’t know what to think about their retirement future.
One-third of consumers are unsure of both their current pension pot size and their target savings for retirement, the research found.
Just 6% expect to retire before 60, with nearly one in five (19%) unsure they’ll ever retire – although respondents said that with the right guidance, they might be able to retire earlier.
The number of people who think they could retire before the age of 65 increases from 21% to 28% if they have financial planning.
How much state pension will I get?
The state pension is the bedrock of most individuals’ retirement plans, providing a guaranteed income for life rising by at least 2.5% every year due to the triple lock.
But not everyone gets the full amount, so it’s important to work out what you’re entitled to so you can plan your retirement savings accordingly.
The state pension rose by 4.1% in April 2025. It means those receiving the full new state pension saw their payout increase from £221.20 a week (£11,502 a year) to £230.25 (£11,973).
Meanwhile, the “old” state pension – known as the basic state pension – rose from £169.50 a week (£8,814 a year) to £176.45 (£9,175).
But the amount you receive comes down to the number of years of recorded National Insurance contributions (NICs) you have.
To access the full basic state pension amount, you need:
- 30 qualifying years of NICs if you are a man born between 1945 and 1951
- 44 qualifying years of NICs if you are a man born before 1945
- 30 qualifying years of NICs if you are a woman born between 1950 and 1953
- 39 qualifying years of NICs if you are a woman born before 1950
The new state pension is open to men born on or after 6 April 1951, and women born on or after 6 April 1953. You have to have 35 years of NICs to get the full amount, and at least 10 years to qualify for it at all.
If you have between 10 and 34 years of contributions on your record you’ll get a lower amount. For example, if you have 20 years of NICs, you will get 20/35ths of the full amount (£131.57 a week).
If you’re employed, your employer will have paid NICs on your behalf out of your wages. You can also top up your NICs record, while some people – like carers – can get National Insurance credits.
You can check how much state pension you are likely to get using the state pension forecast on the government’s website.
If your state pension forecast is lower than the full amount because you have gaps in your National Insurance record you can top those up by paying voluntary contributions.
