What kind of lifestyle could a £100,000 pension pot buy you?

Money

When it comes to saving into a pension, how much is enough? Find out what kind of lifestyle a £100,000 pension pot could buy you in retirement.

When you are working for an employer, you know how much you earn per year, and can plan a lifestyle you can afford around that. But what happens when you retire? What kind of a lifestyle will your pension buy you? 

To help answer this question, and to give you a goal to help you work towards (it’s always easier to stay motivated when you have a savings goal), we are going to look at three different sized pension pots, and get an idea of what kind of lifestyle you might be able to afford with each. 

We are going to look at pension pots of:

  • £100,000
  • £200,000
  • £300,000

As well as looking at what each pension pot could buy you, we’ll also find out how much money you need to be investing now in order to save up a pension pot that size. 

How much money do you need to live on when you retire?

But first, let’s quickly look at how much money you might need to live on when you retire. 

According to the Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards, if you are single when you retire, you would currently need:

  • £14,400 a year for a minimum lifestyle
  • £31,300 a year for a moderate lifestyle
  • £43,100 a year for a comfortable lifestyle

And a couple would need: 

  • £22,400 a year for a minimum lifestyle
  • £43,100 a year for a moderate lifestyle
  • £59,000 a year for a comfortable lifestyle

(You can read more about this and find out how ‘minimum’, ‘moderate’ and ‘comfortable’ lifestyles are defined here.)

What’s your ‘financial gap’ after receiving the State Pension?

In the UK, the full new State Pension for the 2025/2026 tax year is £11,973 a year, or £230.25 a week. This means that, if you are a single person, the current State Pension leaves you with a financial gap of:

  • £2,427 a year for a minimum lifestyle
  • £19,327 a year for a moderate lifestyle
  • £31,127 a year for a comfortable lifestyle

And if you are in a couple, the gap you would need to fill is:

  • Nothing for a minimum lifestyle (you will have an excess of £1,546 a year)
  • £19,154 a year for a moderate lifestyle
  • £35,054 a year for a comfortable lifestyle

It’s these gaps that a private pension can help you to fill. So let’s look at what kind of lifestyle different sized pension pots could give you. 

How much money should you take from your pension each year?

Before we look at how much your pension can pay you, we need to work out how much you can take from your pot each year. Once you retire, you are likely to have a finite amount of money to last you, and the more you withdraw to live on, the quicker you’ll run out of funds. 

This is where the 4% pension rule, or ‘safe withdrawal rate’ comes in. The concept is credited to US financial planner, William Bengen, and works on the presumption that if you start by withdrawing 4% from your pension pot and increasing this each year by the rate of inflation, you are unlikely to run out of money over a 30-year period.

So, for example, if your pension pot is worth £500,000, you would withdraw £20,000 in the first year of your retirement. Then, if inflation is 2% in that year, the next year you would withdraw £20,400. 

We will use the 4% rule to work out the income you could get from different-sized pension pots.

What income will you get from a £100,000 pension pot?

So what income might you get with a £100,000 pension pot? A £100,000 defined contribution pension could give you a starting income of £4,000 a year, or £333 a month, if you withdraw 4% each year. 

This is assuming you don’t take the 25% tax-free cash upfront. If you do choose to take your full tax-free allowance at the start, you would be left with a pension pot worth £75,000. This could give you an initial income of £3,000 a year, or £250 a month if you followed the 4% rule.

How to take money out of your pension

If, when you start to draw down your pension, your money is still invested in the stock market, you’ll find that the value of your pot will change every day. To make things easy, you might decide to withdraw an amount at the beginning of each year, and put it in a savings account with a good interest rate and easy access. You can then pay yourself a set amount each month – much like when you earned a salary. 

You’ll need to make sure that the amount you pay yourself increases each year in line with inflation. (You can see how inflation could impact your retirement savings using PensionBee’s Inflation Calculator.) And, to reduce the risk of running out of funds, you should aim to achieve annual returns over 4% on your invested money. Also remember to factor in the fees charged by your provider.

What lifestyle will a £100,000 pension pot buy you?

So what kind of lifestyle will a £100,000 pension pot buy you? Let’s look again at the Retirement Living Standards and the gaps left after you receive the full new State Pension, and factor in your private pension income. 

If you are a single person you will now have a gap of:

  • Nothing for a minimum lifestyle (you will have an excess of £1,573 a year)
  • £15,327 a year for a moderate lifestyle
  • £27,127 a year for a comfortable lifestyle

And if you are in a couple, the gap you would now have is:

  • Nothing for a minimum lifestyle (you will have an excess of £5,546 a year)
  • £15,154 a year for a moderate lifestyle
  • £31,054 a year for a comfortable lifestyle

(These figures assume you receive the full new State Pension and a £4,000 income from a pension pot of £100,000.)

What lifestyle will a £200,000 pension pot buy you?

If you have pension savings of £200,000, you could achieve an initial income of £8,000 a year, or £667 a month, if you withdraw 4% (again, this assumes you don’t take your 25% tax-free allowance at the start). 

If you are a single person receiving the full new State Pension and withdrawing £8,000 a year, this means you will have a gap of:

  • Nothing for a minimum lifestyle (you will have an excess of £5,573 a year)
  • £11,327 a year for a moderate lifestyle
  • £23,127 a year for a comfortable lifestyle

And if you are in a couple, the gap you would need to fill is:

  • Nothing for a minimum lifestyle (you will have an excess of £9,546 a year)
  • £11,154 a year for a moderate lifestyle
  • £27,054 a year for a comfortable lifestyle

What lifestyle will a £300,000 pension pot buy you?

And finally, if you have a £300,000 pension pot, you could live on an initial annual income of £12,000, or £1,000 a month, if you withdraw 4% and don’t take your tax-free allowance at the start.

If you are a single person receiving the full new State Pension and withdrawing £12,000 a year, this means you will have a gap of:

  • Nothing for a minimum lifestyle (you will have an excess of £9,573 a year)
  • £7,327 a year for a moderate lifestyle
  • £19,127 a year for a comfortable lifestyle

And if you are in a couple, the gap you would need to fill is:

  • Nothing for a minimum lifestyle (you will have an excess of £13,546 a year)
  • £7,154 a year for a moderate lifestyle
  • £23,054 a year for a comfortable lifestyle

How to grow a pension pot of £100,000, £200,000 or £300,000

So how much do you need to invest if you want to retire with a pension pot of £100,000, £200,000 or £300,000? 

If you have no pension savings right now, and want to retire at the age of 66, the table below shows you how much you need to pay into your pension each month. These calculations assume your investment grows by an average of 5% a year, inflation is 2.5% and you pay management fees of 0.70% a year. They have been calculated using PensionBee’s Pension Calculator, and include tax relief and any potential employer contributions.

It’s also important to remember that when you pay money into a pension, you could benefit from tax relief – which is effectively ‘free’ money from the government that’s added on top of your pension contributions. Usually basic rate taxpayers get a 25% tax top up; meaning HMRC adds £25 for every £100 you pay into your pension making it £125. Higher and additional rate taxpayers can claim a further 25% and 31% respectively through their Self-Assessment tax returns.  

PensionBee’s Pension Tax Relief Calculator shows you how much tax relief could be added to your pot and will tell you whether or not you need to file a Self-Assesment to claim a portion of it. If you’re employed, and meet the criteria, your employer will also make contributions that will help to boost the value of your pension pot. So building up a six-figure pension pot is less daunting than you may think.

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

About PensionBee

PensionBee can help you combine your old pension pots into one easy-to-manage online plan that lets you keep track of your balance, make flexible contributions, invest in line with your values and make withdrawals from the age of 55, rising to age 57 in 2028. For more information, visit PensionBee.

Learn how long your pension could last with the PensionBee Pension Calculator.

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