If you’re thinking about planning for retirement, it’s likely you’ve come across the Pension and Lifetime Savings Association’s retirement standards. They list a “comfortable” standard with a likely cost of around £60,600 a year for a couple, or £43,900 for a single person. It’s a widely quoted figure. But, from working with my clients, I know comfort means something different to everyone.
Your retirement can be shaped by where you live, whether you own your home, your health, your family, and what genuinely makes your life feel worthwhile, among many other things. Measuring yourself against a national average is a bit like buying someone else’s shoes and wondering why they don’t fit.
Design your retirement lifestyle
Before any numbers, think about the life you’re actually aiming for. Do you want to travel regularly, or would you be just as happy pottering around closer to home? Will you stay put, downsize, or move somewhere less expensive? These feel like lifestyle questions, but they’re really financial ones in disguise, because they determine almost everything that follows.
Once you have a rough picture, try to separate your spending into essentials, such as housing, utilities, food, council tax, and the things that make life enjoyable: holidays, hobbies, meals out, treats for the grandchildren.
It also helps to think in phases. The early years of retirement, sometimes called the “go-go years”, tend to be the most expensive, when you’re healthy, active, and keen to make the most of your newfound freedom. Things naturally follow a slower pace as time moves on to the “slow-go years,” and later still, the “no-go years” bring a different set of costs, often care-related. Planning for this arc gives you a much more realistic picture than assuming you’ll spend the same amount every year for thirty years.
Translating your desired lifestyle into annual spending
With a lifestyle in mind, try to put a real annual figure on it. Be honest with yourself about any assumptions you’re making, such as housing: retiring mortgage-free is a very different position to renting, or holidays: do you want to take one big holiday a year or three? Don’t forget to factor in inflation, especially for energy, food, and healthcare. And leave some room for the unexpected: a boiler that needs replacing, a period of care, or a family member who needs a helping hand.
Understanding your retirement income sources
Retirement income usually comes from a few different places, and it’s worth understanding each one properly.
State pension
The State Pension provides a reliable base, currently just over £11,500 a year, but it’s rarely enough on its own. It can be a financial foundation, but not a complete solution. It’s worth checking your National Insurance record sooner rather than later, because gaps can often be topped up at relatively low cost, subject to individual eligibility and HMRC rules.
Workplace and private pensions
Workplace and private pensions are usually where the heavy lifting happens. If you’re lucky enough to have a defined benefit scheme, you have a guaranteed income for life. If you’re in a defined contribution scheme, you’re managing a pot of money and making real decisions about how to draw from it.
Making the right decisions about pension access is complex and speaking to a regulated financial adviser before accessing your pension benefits can ensure you’re aware of all your options. Understanding how tax-free cash and flexible drawdown actually work, rather than just knowing they exist, makes a real difference when the time comes.
ISAs and other income sources
There are many other income sources you can use to draw upon in your retirement. ISAs are worth taking seriously, as the tax-free income they provide adds flexibility and can be particularly useful before you reach pension access age. And if you have rental income, part-time work, or other income streams, factor those in, as they can add genuine resilience to your overall picture. With any of these options, tax treatment does depend on individual circumstances and may be subject to change.
Calculating your personal “enough”
Now that you have an idea of a number, you can work backwards. When you take guaranteed income into consideration, such as the State Pension or a defined benefit pension, you can reduce how much you might need to draw from your other sources. From there, you can apply a sustainable withdrawal rate, which is a percentage of your pot that is designed to last throughout retirement without depleting your funds too quickly. You can also adjust for your investment approach and how long you realistically expect to need it. It’s not an exact science, but it’s a far more grounded way of thinking about it.
You don’t have to do this alone. Experienced professionals such as Independent Financial Advisers can support you through the retirement planning process.
What if things go wrong?
A plan that only works when everything goes smoothly isn’t really a plan. Think about how your retirement plans hold up if markets fall sharply in the early years, or what a prolonged period of high inflation would do to your spending power, both recent and relevant lessons.
And it might be worth considering the things that are harder to predict: changes to pension rules, shifts in tax allowances, or the potential cost of care later in life. While these are all relatively unknown, having that contingency plan can help give you confidence in your future.
Closing the gap
If there’s a gap between where you are and where you want to be, there are real things you can do. Increasing pension contributions, especially through salary sacrifice, where contributions are made from your pay before tax and National Insurance are applied, reducing the amount you pay on both, is usually the most tax-efficient route available. Using both pensions and ISAs together gives you more flexibility in retirement than relying on either alone. Even adjusting your planned retirement date by a year or two can make a meaningful difference. And housing decisions, such as downsizing or moving somewhere cheaper, can release capital that genuinely changes the outlook.
“Enough” is not static
Your plan isn’t something you set and forget. Life shifts, priorities change, tax rules change, and the retirement you imagine now might look quite different from the one you want in fifteen years. Once you’re in retirement, it’s important to reassess your spending assumptions, as they may be different to what you imagined. It’s likely you’ll need to be willing to adapt and potentially change goals that no longer reflect who you are or how you want to live.
The emotional value of knowing you’re on track
There’s something genuinely valuable about knowing you’re on track, not just financially, but emotionally. It means you can spend from your pension without fear that you’re going to run out. It means market wobbles don’t send you into a panic. It means you can actually enjoy your retirement rather than spending it anxiously watching the numbers.
Really, “enough” is actually about balance
Pensions, ISAs, and the State Pension each bring something different to the table: tax efficiency, flexibility, stability. Used together thoughtfully, they could support a retirement that’s both comfortable and resilient, and one that achieves what you want it to. But retirement success isn’t really about maximising your wealth, it’s about having enough to live well, for as long as you need to.
What “enough” looks like is yours to define. It’s personal, practical, and ultimately empowering.
If this article has raised any questions for you, feel free to get in touch!
Written by Russell Bruce, Independent Financial Adviser at Flying Colours
Please note:
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.