New research shows that, while Britons can picture their dream retirement, only one in six are confident they can afford it and more than three quarters underestimate the true cost.
Britons, it appears, are surprisingly optimistic about the retirement they want… but far less confident about their ability to pay for it, new research from PensionBee reveals.
More than half of UK adults (56%) say they feel hopeful or excited about retirement. Most can picture what they want their later years to look like, with more time with family (59%), travelling (55%) and simply resting (51%) among the most popular ambitions.
Yet, the research suggests, this optimism is rarely matched by financial certainty.
Just 16% have both worked out how much they will need and feel confident they’re on track to reach their retirement goals. More than a third (38%) have no idea how much their desired retirement will cost.
And 18% say they are confident they’ll achieve their retirement goals despite having no idea what those goals will cost.
The uncomfortable reality of a comfortable retirement
Part of the problem is that many people appear to be underestimating the true cost of the retirement they want.
The Pensions and Lifetime Savings Association (PLSA) – now operating as Pensions UK –calculates the annual after-tax figures for a moderate retirement lifestyle as £32,700 for a single person and £45,400 for a couple.
A comfortable lifestyle would require an after-tax income of £45,400 for a single person and £62,700 for a couple.
Yet more than three quarters (77%) put the annual cost of a comfortable retirement below the £45,000 benchmark Pensions UK set for a single person… and nearly half (47%) estimate it would cost £30,000 a year or less – that’s even below the £32,700 that Pensions UK defines as a “moderate retirement”, a standard that includes an annual overseas holiday and eating out a couple of times a month.
For anyone targeting a comfortable retirement, the full new State Pension is worth £12,548 a year in 2026/27, leaving £32,852 a year to be funded from other income and savings.
Pensions UK estimates that currently only about 9% of the working population is currently on track to reach that standard.
The confidence gap also looks different across generations. Gen X (born 1965 – 1980) are the most likely generation to feel they have left retirement planning too late, at 48%.
Maike Currie, VP Personal Finance at PensionBee, said: “Britons aren’t short of retirement dreams. What they’re short of is confidence that their finances will make those dreams a reality.
“But financial confidence can be built. For people who are in a position to take action, the first steps don’t need to be complicated. A retirement calculator can help put a rough price on the future they want.
“Turning a distant hope into something tangible that you can put a number on is a powerful first step. Once you know what you’re aiming for, you can start making a plan to get there.”
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