Are you aware of how much money you will have when you retire? And how does the average retirement income compare to the income you currently make?
The average retirement income for individuals in the UK is £13,884, which is significantly lower than the average full-time salary. It's understandable to have questions, but there's a whole lot more that goes into retirement planning.
Avoid the trap of just looking at the numbers. Instead, consider the implications for purchasing power. You should not only be able to make ends meet but still have extra money after receiving an average monthly retirement income in the UK. Spending power and any necessary outgoings are more critical when it comes to income than raw numbers.
Read on to know all the nitty-gritty details of average retirement income in the UK.
Where does retirement income come from?
Retirement savings come from many different sources in the UK. This typically includes State Pensions, workplace pensions, private pension pots, and other investments and savings.
State Pension
The State Pension is a UK government benefit that is available to most people when they reach State Pension age. It varies from person to person, but the current full rate as of April 2025 is £230.25 per week. The amount you're entitled to may differ, depending on your National Insurance record.
Workplace pensions
Workplaces are legally obligated to provide a workplace pension scheme and automatically enrol eligible employees. Employees pay directly into their pension pot from their salary before tax, and employers make regular pension contributions of at least 3%. You and your employee may contribute more depending on the type of pension scheme.
To be eligible for a work pension, you must be over 22 years old, under State Pension age, earn over £10,000 per year (2025/2026), and work in the UK.
Private pensions
A private pension or personal pension is one that you arrange and pay into yourself. The money is then invested to grow over time, but it can go up or down until you withdraw the pension funds. When you retire, your private pension income will depend on how much you contributed and how the investments performed.
Other investments and savings
Aside from traditional pension savings, there are alternative methods for retirement income which benefit self-employed people and individuals looking to make additional money for retirement. These methods include investing in stocks and shares, saving in high-interest ISA accounts, or investing in assets like property.
Average UK retirement income
The average UK retirement income is £561 per week for couples and £267 per week for individuals, or £29,172 and £13,884 per year.
While these figures provide a helpful benchmark, it's important to understand what they actually mean for real-life retirement. For many, this average income may just cover the basics - bills, food, and essential living expenses - but it may not stretch far enough to allow for luxuries like travel, home improvements, or helping children financially.
It's also worth noting that these figures include all sources of income, including state and private pensions as well as any additional savings or investments. If your personal pension pot or workplace scheme is below average, you may fall short of this income level unless you have other financial support in place.
That's why pension planning is so important, to ensure you're not only aiming for the national average but also building a lifestyle that meets your personal goals.
What is the difference between average earnings and average retirement income?
Your average earning is the amount of income you currently make if you're employed or self-employed, whereas average retirement income is how much you would expect to earn after you retire. This will be a significant gap for most people, since the Office for National Statistics (ONS) reports that the average weekly income for a full-time individual in 2024 was £728, almost 3x higher than the average retirement income.
Estimating the amount of money you will require for retirement
Everyone's idea of financial security is different, and the amount of money you actually need to retire will differ, too. Still, it's always good to have a ballpark figure that you can work towards. Just remember to factor in everything about the economy and your lifestyle - inflation, housing costs, dependents, hobbies, travel plans, savings, debts, potential tax implications, and cost of living in your area.
So what counts as a comfortable retirement income in the UK? The truth is, it depends on your lifestyle goals. Whether you want to travel, spend more time with family, or simply enjoy some quiet time without financial stress, your retirement income needs to reflect those personal ambitions.
According to research by Pensions and Lifetime Savings Association (PLSA), a single person would require an annual income of £43,100. At the same time, a couple in the UK would need a combined yearly income of £59,000 to have few or no financial concerns in retirement. This is an increase from previous figures.
|
Basic Lifestyle |
Moderate Lifestyle |
Comfortable Lifestyle |
|
|
Single Person |
£14,400 |
£31,300 |
£43,100 |
|
Couple |
£22,400 |
£43,100 |
£59,000 |
Basic lifestyle: Covers all your basic needs, including food and housing costs, as well as some social and leisure activities
Moderate lifestyle: Offers you a bit of wiggle room to squeeze in a few meals out each month, a 2-week holiday, and car costs
Comfortable lifestyle: More financial freedom to enjoy retirement as you please with regular meals out, long holidays, leisure activities, and spending money
While your state and workplace pension funds will contribute to your lifestyle, you may need to consider additional savings and investments to enjoy a decent retirement.
What is the average income for a retired couple?
The average weekly income for retired couples is £561.
Based on the research, though, retired couples may not need double what individuals need to comfortably retire. Just take a look at the earlier graph. This may be because their overheads are lower when they share a home than when they live alone. Another contributing factor might be the likelihood of divorce or separation among those who are single at retirement, which could have a significant effect on their previous financial situation and overall savings.
Individuals in committed, long-term relationships may be more capable of accumulating retirement savings and more driven to do so, which could explain why the current income for retired couples is higher than that of individuals.
Retirement at 55
Most people in the UK can currently access their workplace and private pension from age 55, depending on the scheme they use. However, it's set to change to 57 in 2028.
Accessing your pension early can be appealing, especially if you're considering earlier retirement or working fewer hours. Currently, you can take up to 25% from your pension pot tax-free up to £268,275 (2025/2026). But you should think about the bigger picture. Taking money from your pension pots early means your overall savings will need to stretch over a longer period, and could reduce the amount you'll get each year.
Retirement at 67
The UK State Pension age is increasing to 67 by the end of 2028. The gov website has some helpful tools for planning your retirement and working out what age you can retire.
Factors affecting retirement income
Your retirement income is dependent on your personal and financial factors. One of the biggest influences is the size of your pension pot, which is shaped by how much you contribute over the years. The earlier you start saving, and the more consistent your contributions, the more you're likely to have when you retire.
Other factors include whether or not you're entitled to the full State Pension and any additional income sources you might have, such as rental income, savings, or part-time work. Owning your own home outright can also significantly reduce your monthly outgoings and increase your disposable income.
Inflation, investment performance, taxation, and even life expectancy all play a role in your overall financial picture.
Ways to boost retirement income
The most effective way to improve your financial situation for when you retire is to increase your pension contributions as early as possible. Small, regular boosts, with the benefit of tax relief and employer contributions, can make a big difference over time.
Some people choose to downsize their home and tap into property equity when they retire, which can help to achieve financial goals.
Remember, stay savvy and make use of any resources available to you, such as free bus passes and pensioner discounts.
How Can Unicorn Accountants Help You?
It would help if you made cautious pension plans to ensure you end up with far more than the average retirement income in the UK to avoid falling into the retirement poverty trap. You can seek the support and guidance of Unicorn Accountants, a leading accounting firm in the UK, to create a comfortable retirement plan for your goals and expectations.
Call us today on 020 8064 0454 or contact us online to discuss your financial future.