UK adults believe they need more than £42,000 a year after tax to feel financially secure in retirement, but many expect to work for longer – and increasingly see retirement as a gradual transition rather than a hard stop.
Analysis has found that UK adults believe they need an average after-tax household income of £42,456 a year, in today’s money, to feel financially secure once they stop working.
The research, which was undertaken by YouGov for UK wealth management and employee benefits firm Mattioli Woods, says this is the equivalent of £3,538 a month.
However, expectations vary considerably by age and region, highlighting contrasting perceptions of the income needed to enjoy financial security in later life.
The generational divide is particularly pronounced. People aged 18 to 24 believe they will need £4,606 a month, which is £55,272 a year, compared with £3,021 a month, which is £36,252 a year, for people aged 55 and over. That is an annual difference of £19,020.
Regional expectations also differ sharply. Londoners anticipate needing the highest retirement income, at £4,441 a month, which is £53,292 a year. This compares with £3,868 a month, which is £46,416 a year, among people in the West Midlands and £3,699 a month, which is £44,388 a year, in the South East.
Davinder Grewal, wealth management director at Mattioli Woods, said the substantial differences between age groups and regions show that retirement means different things to different people, adding: “There is no one-size-fits-all retirement income target. The amount someone needs will depend on their circumstances, financial commitments and the lifestyle they hope to enjoy. Understanding those individual needs is key to building a realistic picture of what financial security in later life could look like.
“With more than a quarter of people concerned about running out of money in retirement, it is important to look beyond a headline figure and consider how income, savings and wider financial plans can support the retirement someone wants.”
Retirement expectation gap widens
Expectations versus reality are also off kilter when it comes to when people expect to be able to retire. The Retirement Expectation Gap, which measures the difference between people’s wish to stop work and their realistic expectations, has broken the five-year barrier for the first time, according to research from pension provider Standard Life.
The 2026 Standard Life Retirement Voice report has highlighted that people still want to retire at an average age of 62.3 – which has remained unchanged for three years – but the age at which they expect to realistically stop working has risen again and now stands at 67.6. This has widened the gap between retirement hopes and expectations to 5.3 years, up from 4.7 last year and 4.4 in 2024.
The retirement cliff edge may become a gentle slope
One compromise could be to take a phased approach to retirement. People appear to be adjusting their expectations, with the era of the traditional ‘hard stop’ retirement fading into memory, according to research by provider Aegon.
Just 16% of UK adults expect to stop work completely and enter full retirement. Instead, many expect a more flexible transition into later life. Around 30% anticipate continuing to work in some capacity, split between the 17% who expect to work differently during retirement and 13% who do not expect to consider themselves retired at all.
The analysis also found that 19% expect to phase work down before eventually stopping work altogether, while 10% would consider moving into a completely new role. The largest single group, however, remains those who do not yet know what their transition into retirement will look like, at 23%.
