What’s a good monthly retirement income?
There's no ‘magic number’ for a happy retirement, but working out how much money you’ll need to live comfortably is important. What feels like a good monthly income for you depends on where you live and your lifestyle.
To help you picture it, we’ve broken down what the average retirement looks like, what it’ll likely cost, and how you can start growing your savings and pension to get there.
What’s the average retirement income in the UK?
When you're working out what you might need, it helps to start with some ballpark figures. Here’s a quick breakdown of what retirement income looks like in the UK.
Average income: according to government numbers, pensioner couples in the UK have an average weekly income of £650, which works out around £2,900 a month. For single pensioners, it’s an average of £332.
State Pension: the full new State Pension for 2026/27 is £241.30 a week, which works out to about £997 a month. This makes up a big chunk of income for many retirees.
Other sources: most people top up their State Pension with a workplace pension or a personal pension. You might also have income from savings, investments or property.
How much do you need for a comfortable retirement?
What counts as a ‘good’ retirement income depends on the kind of lifestyle you want. The Pensions and Lifetime Savings Association (PLSA*) has created the Retirement Living Standards to help you picture it more clearly. This assumes you’ve fully paid off your home and don’t have a mortgage.
Minimum: this covers the basics, plus a little extra for fun. Think, one UK holiday a year and eating out once a month. You’d need about £13,400 a year (£1,116 a month) for a single person, or £21,600 a year (£1,800 a month) for a couple.
Moderate: this gives you a bit more breathing room. It means things like a yearly trip to Europe, keeping a car on the road, and dinner out a few times a month. To get there, you’re looking at about £31,700 a year (£2,641 a month) if you’re single, or £43,900 (£3,658 a month) for a couple.
Comfortable: this level gives you a real safety net for the fun things in life. You aren’t just covering the basics, you’re budgeting for extra holidays and spontaneous meals out. You’d be looking at roughly £43,900 a year (£3,658 a month) for a single person, or £60,600 a year (£5,050 a month) for a couple.
Keep in mind, these are just rough guides. Your actual number will depend on lots of things like your health, whether you’re still paying off a mortgage, or if you’ve got family who rely on you. If you’re still struggling to picture it, check out these real-life examples.
Is retirement income taxable in the UK?
Money you get from the State Pension, workplace pensions, and personal pensions is treated as income, so you might have to pay Income Tax on it. When you put money into a pension, the government adds the tax you would have paid back into it, which effectively boosts your savings.
That means that while your pension is taxed, you may be in a lower tax bracket when you eventually retire and withdraw it – making the whole process very tax-efficient.
When you start taking money from a private pension, you can usually take up to 25% of it tax-free. You still get a Personal Allowance in retirement, which is the amount of income you can get before you start paying tax. For the 2026/27 tax year, it’s £12,570.
Because there are lots of ways to take money out of your pension when you retire, it’s often useful to speak to a financial adviser.
How much should you save each month for retirement?
There’s no one right answer here. It all depends on your age, your goals, and the savings you’ve already built up.
The main thing to remember is that the earlier you start, the more time your money has to grow. Since retirement savings are ideally put away for a long period of time, it’s better to build up money in a pension where it’ll be invested, rather than relying on cash savings alone. Investments have better potential for growth and less risk of being affected by inflation. Just remember, investing isn’t a straight line and there’ll be ups and downs along the way.
If you’re looking for a place to start, a common rule of thumb is to take the age you start saving, halve it, and save that percentage of your pre-tax salary. So, if you start at 30, you’d aim to save 15% of your income. To help you get there, the government gives you tax relief when you pay into a pension. This means some of the money that would’ve gone towards tax goes into your pension pot instead. Our pension prediction tool is a good way to get a feel for what your current and future pension looks like based on all this – check it out in the Monzo app.
When it comes to where to put that money, you can invest it in a workplace pension as well as a self-invested personal pension (SIPP) if you want more control. You can also invest in an ISA, which comes with tax-free benefits to help build up your retirement pot. Remember, once your money’s been put in a pension it can’t usually be accessed until you’re 55, going up to 57 from April 2028.
Ways to manage and grow your retirement savings
Here are a few ways to stay on track:
Pick the right home for your money: don’t let your hard-earned cash just sit there gathering dust. Use pensions and ISAs to grow your money tax-efficiently. Think of it as the government giving your savings a little boost with pension top-ups and tax-free ISA allowances.
Budget and track: knowledge is power! Once you’ve landed on a percentage to save, keep an eye on your spending to see exactly where your money’s going. You can categorise your spending and set monthly budgets in Monzo to help you spot gaps, cut back and stay on track.
Put your savings on autopilot: you don’t have to juggle all this money management on your own. There are lots of ways to automate your retirement savings, like scheduling payments to make regular contributions to your pensions and savings as soon as you’re paid.
Should I consolidate my pensions?
If you’ve accumulated a few pensions throughout your worklife, keeping track of different logins and statements can feel like a hassle. To make life simpler, you could bring your pensions together by consolidating them into your current workplace pension or personal pension. If you have a Monzo account, we can help you track and combine your pensions. Think of it as a spring clean for your future self.
UK residents only. Ts&Cs apply.
Monzo current account required. To open a Monzo Pension you must be between 18-70 years old only. The value of your pension could go up or down and you could get back less than you put in. To open an ISA you must be 18+ years old. Tax treatment depends on individual circumstances and may change in the future. Ts&Cs apply.
*Pensions and Lifetime Saving Association (PLSA)/ Loughborough University Retirement Living Standards
Questions? Answers.
What’s the average retirement income for a single person in the UK?
While exact figures vary, the PLSA suggests a single person needs about £13,400 a year for a minimum lifestyle, £31,700 for a moderate lifestyle, and £43,900 for a comfortable lifestyle.
What’s the average retirement income for a couple in the UK?
The average retired couple has an income of around £2,580 a month after tax. The PLSA benchmarks suggest £21,600 a year for a minimum lifestyle, £43,900 for a moderate lifestyle, and £60,600 for a comfortable lifestyle.
What’s the State Pension amount in the UK?
The full new State Pension for 2026/27 is £241.30 a week, which is £12,548 a year (see the government website for more information).
Do I pay tax on my pension income after retirement?
Yes, most pension income is taxable. However, you still get a Personal Allowance, and you can usually take up to 25% of a private pension tax-free. There’s a lifetime cap on tax-free withdrawals which is currently £268,275, which can be taken in more than one go.