New calculations from Quilter, the wealth manager and financial adviser, have found that for a single person to achieve a comfortable lifestyle in retirement they must have a pension of pot of £738,000.

The new calculations are based on the PLSA’s Retirement Living Standards research which has just been updated to account for annual inflation, perceptions of what constitutes varying levels of retirement and the new State Pension.

The research reveals how much people will now need in retirement to achieve a minimum, moderate or comfortable retirement lifestyle.

Quilter’s new calculations show that in one year the size of a pot needed for a comfortable retirement has grown by nearly £100,000. Furthermore, a couple now needs close to a million (£929,000) in joint pension wealth for them both to achieve a comfortable retirement.

In January 2023, Quilter calculated using the PLSA’s previous set of figures that a pot of £645,000 was needed for a comfortable retirement. This is partly down to inflation and also related to changes to the composition of the basket of goods used for the index.

Now, a comfortable retirement requires a single person to have an annual income (gross of tax) of £39,387 per year on top of the state pension, which in 2024-25 is £11,500 per year.

According to the association, a comfortable retirement consists of a range of measures including being able to go for a fortnight in a 4* holiday in the Mediterranean every year and three UK long weekends and up to £1,500 a year on new clothing and footwear a year. Also this year measures such as being able to gift £1,000 a year to support family members has been highlighted in the PLSA research.

For someone looking to achieve what is defined as a moderate retirement lifestyle, a single person will need to build up a pension pot of approximately £459,000 up from £301,000 compared to last year’s calculations.

A moderate lifestyle includes being able to afford £74 a week on food (including food away from the home) as well as two weeks in Europe and a long weekend in the UK every year. Gifting £1,000 to family was also highlighted as a necessity among retirees aiming for a moderate retirement.

Finally, for someone looking to achieve a minimum lifestyle which requires someone to have £3,357 in extra income per year on top of the State Pension they need to have built up a pot of around £63,000. A minimum lifestyle enables someone to spend £50 on a weekly food shop, a week long holiday a year and no car.

Jon Greer, head of retirement policy at Quilter said: “The massive annual leaps in the amount needed to achieve the three levels of retirement standards don’t just reflect the impact of higher food and energy costs. Whilst such changes have impacted those on a moderate and lower expenditure level to a greater extent, the latest update reflects some key changes to the composition and expectations on what should be included from income.

“For those seeking a moderate level there is a greater importance on helping their family members financially – no doubt partly driven by cost of living crisis. In addition, there appears a greater appetite for activities outside of the home like eating out and holidays compared to the pre Covid era.

“However, what the figures continue to show is that it will take a concerted effort to achieve a pension pot required to meet the difference between the income level indicated by the standard and that provided from the full state pension.

"The earlier that savers understand the difference, then the easier it will be to plan how to achieve it – or achieve the target that’s personal to you. Unfortunately, no one is going to do it for you.

“But the major worry is that these figures are all based on the assumption that the pensioner does not have any housing costs on top of any lifestyle costs. According to the Pensions Policy Institute (PPI) by the year 2041 there could be up to 3.6 million households renting while in retirement, 1.9 million more than today.

“Future generations that have not been able to secure a home and are renting in retirement or perhaps are still paying off marathon mortgages then this is going to eat further into someone’s pension pot.

“There is also the yet to be addressed social care crisis. Many people are living longer but not necessarily in good health and getting the right care can be hugely expensive.”