- New research by AJ Bell shows that retirement expectations vary with age
- Gen Z think that they’d need almost double the amount of annual income which Boomers believe would allow for a comfortable retirement
- Only one-fifth (20%) of 18-34 year olds intend to rely on the state pension
- Monthly pension contributions required to reach the £39,000 of annual income which the average Brit thinks they’d need to retire comfortably
Charlene Young, senior pensions and savings expert at AJ Bell, comments:
“Our research shows that younger Brits have higher expectations for retirement, highlighting the importance of long-term planning and suggesting these generations are aware of the need to put their own money away towards their goals.
“On average, Gen Z – those aged between 18 and 27 – stated that they’d need £46,000 in annual income to enjoy a comfortable retirement, compared to Boomers who thought that £24,000 a year would be sufficient.
“Younger Brits are optimistic that this is within reach, with 18-34 year olds stating they expect they’ll have around £460,000 in retirement savings on average by the time they stop work, compared to the £200,000 for those already 55 and over.
“What is concerning is the large number of respondents who don’t have any money in their pension. A fifth (21%) of Gen Z respondents stated that they currently have no retirement savings, with 15% of Boomers – the age 60 to 78 bracket – yet to retire saying the same.
“The earlier you can start saving for retirement, the better, even if you can only afford a small amount. Delaying even by a few years means having to find more money to put away in those future months to achieve a decent standard of living during retirement.
“Pensions offer great tax incentives in return for long-term savings. Contributions you make benefit from income tax relief, and your employer gets tax breaks on what they pay in, too. The investments inside your pension pot are also sheltered from income tax.”
How do different age groups intend to fund their retirement?
“Our research shows that confidence in the state pension among young people is low. Just 20% of those aged 18-34 stated that they intend to use the state pension to fund their retirement, compared to 46% of those aged 35-54.
“This suggests that younger people are more aware of the need to fund their own retirement and wish to put away their own money to achieve the lifestyle they desire.
“Nearly two thirds of 18-34 year olds (64%) said that they intend to use some cash savings to fund their retirement, followed by 34% who intend to use money from a defined contribution workplace pension. A third stated that they would be using a Stocks and Shares ISA.
“In contrast, the state pension was the most popular choice among those over 55 who hadn’t yet retired, followed by cash savings (63%). Less than a third (29%) expect to use money from a pension scheme.
“While it’s important to hold some cash for spending you’ll need to make in the short to medium term, the purchasing power of your cash is likely to be eaten up by inflation over the long term.
“Alternatively, investing your long-term cash offers the best chance of growing the value of your money over and above inflation in the long term.”
How to achieve a yearly retirement income of £39,000
“Our findings show that the average Brit reckons they’d need a yearly income of £39,000 to enjoy a comfortable retirement. Stripping out the current full state pension leaves £27,000 to find from retirement savings in today’s money.
“Starting earlier means the initial amounts you need to put away are typically lower and reduces the money you’ll need to save later on.
“If you started saving at the age of 25, you’d need to save £373 per month into your pension, together with your employer, to help you achieve an annual retirement income of £27,000 from your pot by age 67. This assumes 3% salary and contribution growth per annum and modest investment growth of 5% a year before charges.
“If you left it to the age of 30 to start, total payments would need to rise to £483 each month. At age 40, this would increase to £850 per month, and would be higher still, at £1,200 at age 45.
“Saving these larger sums could be challenging, considering you may have more immediate short-term outgoings to consider, so paying into your pension early increases the likelihood of achieving your desired retirement.”
Source: AJ Bell. Assumes 3% yearly growth on salary and contributions, and entering retirement at a state pension age of 67. Figures include employer contributions. Growth of 5% per annum, adjusted for inflation and charges.
*Based on a nationally representative sample of 2,000 adults in the UK, conducted by Opinium on behalf of AJ Bell between 29 August and 2 September 2025.
