Most people don't know their retirement number. And without a target, it's impossible to know whether you're on track. Here's how to work it out.
The three UK retirement standards (2025)
The Pensions and Lifetime Savings Association (PLSA) defines annual retirement income benchmarks for a single person:
- Minimum (£14,400/year): covers basic needs, no car, limited activities
- Moderate (£31,300/year): some flexibility, occasional holidays, a car
- Comfortable (£43,100/year): regular holidays, new car every 5 years, more financial freedom
Most people target something between moderate and comfortable. The State Pension covers £11,502 of this — so your personal pension needs to bridge the gap.
Working out your required pot using the 4% rule
The 4% rule: you can withdraw 4% of your pension pot per year and it should last 30 years (age 67 to 97). To find your required pot, divide your needed annual income by 0.04.
Moderate retirement target: £31,300/year
- Subtract State Pension: £31,300 − £11,502 = £19,798 needed from your pot
- Required pot: £19,798 ÷ 0.04 = £494,950
Comfortable retirement target: £43,100/year
- Subtract State Pension: £43,100 − £11,502 = £31,598 needed from pot
- Required pot: £31,598 ÷ 0.04 = £789,950
How much to contribute each month to hit the target
To build a £500,000 pot at 7% annual return (reasonable for a diversified equity fund over decades):
- Starting at 25, retiring at 67 (42 years): ~£250/month
- Starting at 35, retiring at 67 (32 years): ~£520/month
- Starting at 45, retiring at 67 (22 years): ~£1,150/month
The earlier you start, the more compounding does the work. Starting at 25 vs 35 requires half the monthly contribution for the same outcome.
The State Pension — don't ignore it
The full new State Pension in 2025/26 is £221.20/week (£11,502/year). You need 35 qualifying years of National Insurance contributions. Check your NI record via the government's online service — if you have gaps, voluntary Class 3 contributions (£17.45/week in 2025/26) fill them, and each year bought is worth £329/year in State Pension for life. That's typically a very strong return.
Auto-enrolment isn't enough
The minimum auto-enrolment contribution is 8% of qualifying earnings (3% employer + 5% employee). On a £37,000 salary, that's £2,960/year going into your pension. Building a £500,000 pot on those contributions alone would take around 45 years — possible if you start at 22, not sufficient if you start later.
The retirement calculator lets you model your exact situation — enter your current pot, age, salary, contribution rate, and retirement target to see whether you're on track and what monthly contribution closes any gap.