The average amount retirees require per year for a retirement in 2025 is £36,915, which is £25,413 higher than the annual state pension, according to research by Shepherds Friendly.

For a comfortable retirement in 2025, research suggested that an annual income of nearly £50,000 was required on average, while a moderate retirement would typically cost about £31,848 each year.

The full rate of the new UK state pension is £11,502 per year and approximately £221 a week, as of 2024.

Shepherds Friendly said that while the state pension offers a financial safety net, it was far less than the amount most people would need to enjoy a comfortable retirement.

Despite recognising the gap and contributing to a private or workplace pension, Shepherds Friendly said a “surprising” number of people had not considered how much they need per year to retire.

When it comes to retirement spending, the biggest costs were predicted to be mortgage repayments and additional housing costs (on average £7,600 per year), fuel and power (£3,600), transport (£3,392), and food and drink (£3,530).

Meanwhile, spending on non-essentials for retirees such as recreation and culture was estimated to be £3,238 on average, while spending on restaurants and hotels was £1,667.

In addition to this, the research also revealed that retirees have an average of £38,000 left to pay on their mortgage by the time they turn 65.  

For a five-year mortgage term, this could leave retirees needing to pay out around £7,600 per year to pay this off if they retire at 65.

Shepherds Friendly chief financial officer, Derence Lee, said that as savers navigate through their working life, it was “easy” to put off thinking about our later years in life and suggested that the rising cost of living can make saving for the future difficult for some.

Lee added that relying only on a state pension to cover retirement costs was “extremely challenging” and encouraged savers to save earlier to increase their investments.

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