How long does my pension need to last?

How long does my pension need to last?

The simple answer is 'longer than you might think', thanks to increasing life expectancy. 

You'll need to plan carefully to make your pension savings last throughout your retirement, and perhaps beyond if you want to pass some money on to loved ones. 

Make your money go further

Find the best deals, avoid scams, and grow your savings with our expert guidance. From only £4.99 a month.

Join Which? Money

Cancel anytime.

When can I retire?

Until 2011, there was a default retirement age of 65, but now the decision about when to stop working is in your hands.

In fact, more people are choosing to put off retirement. The employment rate at age 65 has seen one of the largest increases when compared to other age groups, up from 26.9% in 2014 to 40.4% in 2024.

The average age of exit from the workforce has reached a high of 65.7 for men and 64.5 for women, according to DWP data in September 2024.

For many people, the decision about when to retire comes down to when they feel they can afford it.

You can claim state pension when you reach the state pension age (currently 66), even if you're still working. 

With private pensions, the earliest you can start taking this money is when you turn 55.

What is my life expectancy?

Data from the Office for National Statistics (ONS) shows that men aged 65 in the UK in 2021 to 2023 can expect to live on average a further 18.6 years (to age 83.6), while women aged 65 can expect to live on average a further 21.1 years (to age 86.1).

This means you'll need to plan to make your savings last at least a couple of decades in retirement. 

Of course, you could easily live for longer. The number of centenarians is on the rise: according to the ONS, there were 14,850 people aged 100 or older living in England and Wales in 2023 - more than double the number in 2003.

How much will I spend in retirement?

Saving as much as possible, as early as possible, will help put you in the strongest financial position for life after work. But it's hard to know exactly how much you should aim for. 

The Pension and Lifetime Savings Association (PLSA) has developed three ‘retirement living standards’ to help address this problem. These reflect the amounts you’d need for a minimum, moderate and comfortable standard of living in retirement.

The latest figures show single-person households needing £14,400 (minimum), £31,300 (moderate) or £43,100 (comfortable) for the retirement livings standards, while couples require £22,400, £43,100 or £59,000 respectively. 

Where will my retirement income come from?

To help you plan for retirement, you'll need to understand your options for accessing your pensions.

Defined benefit pensions

If you have a defined benefit pension (also known as a final salary pension) you will receive a guaranteed income for the rest of your life. This is either based on your ‘career average’ earnings, or your final salary.

Each year the amount will usually increase, though not necessarily in line with inflation. 

This type of pension is increasingly rare, as they are expensive for employers to offer.

Defined contribution pensions

With defined contribution pensions, the onus is on you to make sure your money lasts. 

How much income you get depends on the value of your pot and how you choose to access it. You have several options, including:

• Buying an annuity involves swapping your pension savings for a guaranteed regular income that will last for the rest of your life. How much you get is determined by how much you’ve saved, your health and the rate the annuity provider offers. An annuity offers you certainty throughout your retirement, but at the expense of flexibility: once set up, an annuity can’t be changed.
• Pension drawdown involves keeping your money invested and withdrawing it as you need throughout your retirement. You'll need to be careful about withdrawing too much - especially when markets are falling, as this can make it harder for the value of your pot to recover. 

State pension

At 66 you’ll receive a boost to your retirement income in the form of the state pension. 

How much you get depends largely on your National Insurance record. 

In 2025-26, those qualifying for the full new state pension receive £230.25 a week.

How much do I need to save?

Our calculations show that couples need a combined pot of around £376,700 alongside their state pension to achieve the PLSA's moderate living standard (£43,100) if accessing their money via pension drawdown, or £408,600 if buying an annuity. 

Those living alone require £375,100 (drawdown) or £406,900 (annuity) to reach the moderate living standard. 

Retirees living alone face a tougher challenge, given their higher relative expenditure combined with lower state pension and tax-free allowance compared with a couple.

Our drawdown figures are based on a saver withdrawing all their money over 20 years from age 65, and assume investment growth of 3%, inflation at 1% and charges levied at 0.75%. 

Annuities tend to be a more expensive option than drawdown because they produce a guaranteed income for life which might stretch beyond an average 20-year retirement.

• Find out more: where to find professional pension advice