New research shows significant uncertainty over expected retirement income, particularly among younger adults. More than one in eight people in the UK (13%) believe they will personally need over £100,000 a year for a good standard of living in retirement.
This figure is notably higher than the £43,900 estimated by Pensions UK’s Retirement Living Standards for a comfortable lifestyle for a single person, although that figure excludes housing costs and assumes tax has been paid.
A report by insurer and investment company Royal London, Workplace Pensions – How much is enough?, highlights a generational divide in expectations. Over one in five people aged 18-34 (22%) expect to need £100,000 or more each year to live well in retirement, while only 3% of those aged 50-69 believe the same. The findings arrive ahead of a Budget widely expected to include tax changes that could affect long-term savers.
Greater Uncertainty
Financial concerns are also evident. The research shows that 26% of people feel anxious about whether they will have enough money to retire after checking their pension balance. A further 15% feel it is either too early or too late to make meaningful changes to their retirement planning.
Despite these concerns, many do not seek advice. Only 27% of employees with a workplace pension have sought guidance or advice in the last year, and 17% have done so more than a year ago. Over half (52%) have never sought professional advice, which may make it harder for them to prepare adequately for retirement.
Clare Moffat, Pension and Tax Expert at Royal London, said, “It’s clear that younger adults think they’ll need significantly higher income when they’ve finished work than those closer to retiring. This could be driven by their cost of living and inflation expectations, and also because young people face greater housing uncertainty than those before them.”
Changing Expectations Among Younger Adults
The research suggests that younger adults view retirement as more financially demanding due to rising housing costs. Nearly half of those aged 18-34 (48%) expect to still be paying rent or a mortgage once they retire, compared to one in three (33%) of those aged 50-69. Younger adults also intend to retire earlier, with the average age they aim for being 59. Earlier retirement combined with ongoing housing expenses places greater pressure on them to save more during their working years.
Moffat noted the impact of economic uncertainty on younger adults. “With such a wide gap in generational expectations, it’s easy to suggest pension expectations are overblown, but for a generation that’s experienced multiple economic downturns and high inflation, many will be concerned for their future quality of life,” she said. She added that many younger adults question whether the State Pension and personal savings will be sufficient and must manage current costs while planning for the future. She emphasised that “breaking down barriers to guidance and advice, especially in relation to cost and trust, will be essential to tackling generational divides.”
Gender Gaps Add to Concerns
The study also identifies a gender gap in expected retirement income. Across all age groups, men expect to need between 18% and 30% more than women for a good standard of living. Among younger adults aged 18-34, men estimate they will need approximately £81,300 annually, compared to £69,000 for women.
This pattern continues into mid-life, with men aged 35-49 expecting £64,000 versus £49,400 for women. For those aged 50-69, men anticipate £38,900 compared to £31,800 for women.
Moffat concluded that lower expected retirement income among women may reflect concerns about pension adequacy. “Lower expected retirement income among women may reflect concerns around pension adequacy, shaped by earnings gaps and time out of the workforce. This is an issue that will be looked at by the recently formed Pensions Commission. Women may also take a more cautious view of retirement needs, influenced by greater cost of living pressures.”