The single person’s financial penalty is real – from booking holiday stays to heating a home, single people often have to pay more than it would cost a couple sharing.
New research shows how this extends to retirement, meaning if you’re single, you’ll need to pump more into their pension savings to enjoy a comfortable retirement.
Single pensioners need £225,000 more in their pension pot than couples to achieve a ‘moderate’ standard of living in their golden years, according to Standard Life.
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While couples can pool their savings and share expenses, singles must foot the bill alone, leading to a huge potential shortfall.
Single pensioners need to save £54,500 on top of their state pension just to meet the Pension and Lifetime Savings Association’s (PLSA’s) minimum living standard in retirement.
Meanwhile couples with two full state pensions would not need any savings beyond the state pension to reach the same level.
Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group says: “Whether single by choice or by circumstance, solo living comes with a financial price tag. While it seems unfair, mortgage, rent, utility bills and holidays costs don’t simply halve for those living alone.
“The same applies to pension savings. While couples can combine their resources, single retirees need to build up much more to achieve the same lifestyle in retirement.”
How much does a single retiree need for a basic retirement?
Single retirees need a yearly income after tax of at least £14,400, according to the PLSA. This is for a minimum living standard in retirement – which includes covering the basics plus a week’s holiday in the UK, but no car.
The full new state pension is currently £11,973 a year (2025/26), so assuming they receive that, a single retiree needs an extra £2,884 a year just to cover their costs at the basic standard of living.
To buy an inflation (RPI) linked annuity – which is a guaranteed income for life – to cover this shortfall amount they would need to have around £54,500 in retirement savings at current rates.
On the other hand, pensioner couples need an annual income of £22,400 to reach the same standard of living, according to the PLSA. This would be completely covered by two full state pensions – the couple won’t need to have saved any more for retirement to meet the cost of a basic lifestyle.
What is the cost of more luxury in retirement?
Single pensioners seeking a bit more luxury in retirement face an even bigger gap compared to their peers in couples.
For a moderate standard of living – think a car and one two-week foreign holiday a year – the PLSA says single pensioners need an after-tax income of £31,300 per year.
Assuming they get the full new state pension, a single person would need an annuity which provides £24,010 a year to cover the difference, taking account of tax. To achieve this, they would need to save around £439,000.
Pensioner couples, meanwhile, need an annual income, after tax of £43,100. Taking account of two full state pensions, they would need £428,000 in their joint pension pot to achieve this income level.
This means they would need to save £214,000 each – nearly half the amount of a single pensioner.
For a truly comfortable living standard in retirement – including a three-week foreign holiday, a full kitchen and bathroom replacement every 10-15 years and a £1,500 a year clothing and footwear budget – single pensioners would currently need to save a pension pot of around £709,000.
Pensioner couples would need £709,000 between them, or £398,000 each – meaning a single pensioner would need to save £311,000 more that their couple peers to achieve the same lifestyle.
How big a pension pot do you need?
The table below looks at how much it would cost you to buy an annuity which would meet the minimum, moderate and comfortable income requirements in retirement.
PLSA Retirement Living Standard | Pot needed for Single Pensioners | Pot needed for Pensioner Couples (per person) | Difference |
|---|---|---|---|
Minimum | £54,500 | N/A – enough on two state pensions | £54,500 |
Moderate | £439,000 | £214,000 | £225,000 |
Comfortable | £709,000 | £398,000 | £311,000 |
* Figures assume retirement at the age of 66, single life annuity, no guarantee, paid monthly in arrears, linked to RPI, non-smoker with no underlying health conditions. Account for tax free income up to personal allowance and then income taxed at 20%.
Ambery says: “Let’s not forget, relationships don’t always last, and the importance of pension planning extends beyond just those who are single today. Awareness of these figures can help when considering pension sharing in divorce settlements or preparing for a potential single retirement.
“It’s important to take control of your future financial happiness whether you’re single or in a relationship. Starting early, making regular contributions, and topping up savings where possible can make a real difference.”
Tips for maximising your pension
1. Never opt out of your workplace pension scheme
Under auto-enrolment rules, UK employers are legally obliged to provide an employee pension scheme and, as soon as you start working, you will be automatically enrolled (provided you are 22 or older, and earn at least £10,000).
Your employer is required to contribute a minimum of 3% and you will automatically start contributing 5%.
Do not opt out or reduce your 5% contribution. Doing so could mean that you lose your employer contribution too – which is essentially free money. On top of this, opting out will mean you lose out on valuable tax relief.
For example, if you are a basic-rate taxpayer and you put £80 into your pension, HMRC will gross it back up to £100 to refund you for the 20% tax you paid originally.
2. Start building your pension young
When it comes to investing and saving for retirement, time is your friend. The earlier you start building your pension, the more opportunity you have for it to grow, benefiting from compound returns.
3. Maximise your pension contributions
Each year, you can shield up to £60,000 from the taxman in your pension pot (including your own contributions, employer contributions, and any tax relief). This means that maximising your pension contributions is a good idea.
You can’t access your private pension until you are 55 (and this is increasing to 57 from 2028), so you might be reluctant to lock away money that you could otherwise spend today. However, over time, it should grow significantly thanks to investment growth – and any investment income or capital gains will be shielded from the taxman too.
While ISAs also allow you to shield your investments from income and capital gains tax, the tax reliefs offered by pensions are far more generous overall. That’s thanks to the tax relief HMRC gives you when you pay money in. You can also contribute up to £60,000 tax-free to your pension each year, while ISAs only allow you to contribute £20,000 per year.
4. Find out whether your employer will match your pension contributions
If you increase your pension contributions above the mandatory 5%, some employers will match this up to a certain amount. This is another great way to get free money.
5. Buy voluntary National Insurance credits
If you don’t qualify for a full state pension because you took some time out of work, you should consider buying voluntary National Insurance credits to top up the amount of state pension you are entitled to. You need thirty qualifying years of National Insurance contributions to qualify for the full state pension (£11,502.40 a year).
As we explored in a previous MoneyWeek article, anyone who draws a state pension for three years or more will usually benefit from paying voluntary National Insurance contributions.
6. Claim child benefit
Another reason some people miss out on valuable National Insurance contributions is because they take time out of work to look after children. However, if you claim child benefit, then HMRC knows that you are doing unpaid childcare work, which prevents your National Insurance record from having gaps in it.
Even if you aren’t entitled to receive any money through child benefit (the high income charge kicks in for households where one parent earns £60,000 or more), you should still complete the child benefit form to collect your valuable National Insurance credits.
You can tick a box on the form that says you want the National Insurance credit but not the money or, alternatively, you can claim the money and then pay it back through your self-assessment tax return.
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