Start with what the State Pension gives you
The full new State Pension is £241.30 a week — £12,547.60 a year — for the 2026/27 tax year. To receive the full amount you normally need 35 qualifying years of National Insurance contributions. Many people will receive less, and you can check your own forecast on GOV.UK. The point here is simple: the State Pension is your floor, and most people want income on top of it. GOV.UK — Your State Pension explained · 2026/27
The 4% rule: turning a pot into income
A widely used planning rule of thumb is that you can safely withdraw about 4% of your portfolio in the first year of retirement, growing the withdrawal with inflation, and expect the money to last roughly 30 years. It is a planning heuristic, not a guarantee. To turn a pot into income: pot needed = annual income ÷ 0.04 (equivalently, income = pot × 4%).
Worked examples for 2026/27
| Target retirement income | Minus State Pension | Gap to fund | Pot needed (4% rule) |
|---|---|---|---|
| £20,000 / year | £12,548 | £7,452 | £186,310 |
| £25,000 / year | £12,548 | £12,452 | £311,310 |
| £30,000 / year | £12,548 | £17,452 | £436,310 |
| £35,000 / year | £12,548 | £22,452 | £561,310 |
The 4% rule is a planning rule of thumb, not a guarantee. Withdrawal rates vary with market conditions, inflation and how long retirement lasts.
If you already have savings, how much more do you need?
The pots above assume you start from zero. If you already have a pension pot, the monthly amount you need to save falls quickly. The table uses the same assumptions — age 35 now, retiring at 67, a 5% annual return — and shows what it takes to reach the £311,310 pot needed for a £25,000 retirement income (after the full State Pension, using the 4% rule).
| Current pension pot | Monthly saving needed to reach £311,310 |
|---|---|
| £0 | £330 / month |
| £20,000 | £225 / month |
| £50,000 | £68 / month |
Two conclusions stand out. First, starting earlier is the cheapest way to build a pot — every year you delay adds a bigger monthly burden. Second, the State Pension does heavy lifting: for a £25,000 retirement income it covers more than half of it before you save a penny.
What the numbers assume
These examples assume you receive the full State Pension and that the 4% rule gives you a sustainable withdrawal. They do not include the income tax you may pay on private pension withdrawals (you get a 25% tax-free lump sum first), nor tax on State Pension. They also ignore market volatility — a real retirement pot does not grow at a constant rate.
How to build the pot
For most employees, workplace pensions are the highest-value first step: in 2026/27 the minimum total contribution is 8% (typically 5% from you including tax relief and 3% from your employer), on earnings between £6,240 and £50,270. Contributions benefit from tax relief at your marginal rate, and the annual allowance is £60,000. Over 30 years, saving £500 a month at a hypothetical 7% return compounds to roughly £610,000 — comfortably above the £436,000 needed for a £30,000 income in the table. GOV.UK — Auto-enrolment · 2026/27
Frequently asked questions
Is the State Pension enough to live on?
What is a safe withdrawal rate?
Does this include the 25% tax-free lump sum?
Will the State Pension be enough in 20 years?
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