How to plan for retirement without relying on the state pension

Millions of people rely on the state pension but the cost is ballooning – and it’s only set to surge further.

The full new state pension has risen in value by 55% over the last 10 years alone and is forecast to have cost the government £146 billion in 2025/26.

The Office for Budget Responsibility (OBR) projects it will cost 9% of GDP by 2075/76, up from 5% now, putting the rise down to an ageing population and the cost of the triple lock – the policy which means the state pension rises annually by the highest figure out of inflation, wages and 2.5%.

The UK’s ageing population and falling birth rate are compounding the strain on taxpayers, as pensioners will likely live for longer but there will be fewer workers to pay taxes.

There were 585,396 births in England and Wales in 2025, according to the latest available data from the Office for National Statistics (ONS), down from 594,677 in 2024 and the lowest number since 1977 (569,259).

Meanwhile, life expectancies across the UK are on the up. Over 19% of girls and 12% of boys born in 2024 can expect to live to 100, according to the ONS. By 2049, this is forecast to rise to 26% for girls and 18% for boys.

Source: ONS

These factors are forecast to push up the cost of the state pension to ever greater heights.

Heidi Karjalainen, senior research economist at the Institute for Fiscal Studies (IFS), said an ageing population will also seep into health spending, “creating greater overall pressure on public finances”.

What could the UK state pension look like in the future?

These surging costs could prompt the government into ditching the triple lock and/or raising the state pension age higher than currently planned.

The state pension age will rise to 68 by 2048, but in an April 2026 report, the IFS said there was a “good case for legislating for further increases in the state pension age beyond 68, as part of the response to rising life expectancy and the resulting public finance pressures”.

Considering the growing cost of the state pension, swathes of think tanks have called on the government to ditch the triple lock policy.

How think tanks like the Intergenerational Foundation, IFS and Tony Blair Institute for Global Change (TBI) think the rising cost of the state pension should be combatted varies, but all three agree it needs to put less pressure on the public purse.

However, for now at least, the triple lock is here to stay. Prime minister Andy Burnham has pledged to honour the Labour manifesto pledge and retain the policy.

What happens to the mechanism afterwards is less clear. But despite fears it might not be as plentiful in the future, some Brits seem undeterred.

A recent survey by investment platform Hargreaves Lansdown found that one in 10 people expect to be totally dependent on the state pension in retirement, while two thirds said they will rely on it “to some extent”.

How much do you need for a comfortable retirement?

Trade body Pensions UK’s Retirement Living Standards give an indication of how much money you need each year for a certain standard of living in retirement.

The standards are updated each year and based on someone owning their home, and after tax deductions.

To meet a ‘moderate’ standard of living, a single person household currently needs £32,700 a year. This rises to £45,400 a year for a ‘comfortable’ lifestyle.

The amount needed for a ‘minimum’ standard of living in retirement is £13,900 for a single person.

Calculations from wealth management firm Quilter estimate you would need an overall pension pot of £691,000 to match Pension UK’s comfortable standard of living. To meet the moderate level, you would need a total pot of £413,000.

Quilter’s calculations are based on someone receiving a full new state pension (£12,548 per year) and using their pot to buy an annuity paying 6.1%.

Someone who started saving into a pension at 25 would need to contribute £270 a month to reach the £691,000 figure by age 66, assuming growth of 6% and after fees.

That same person would need to contribute £162 a month to reach the £413,000 figure by age 66, assuming the same growth and after fees.

But what about if your state pension was reduced?

Assuming someone received a new state pension of £3,583 a year (based on 10 National Insurance years), the size of the pension pot needed for a comfortable standard of living rises to £838,000.

To meet the moderate level, the size of the pot needed rises to £560,000.

Someone who started saving into a pension at 25 would need to contribute £328 a month to reach the £838,000 figure by age 66, assuming growth of 6% and after fees.

For the moderate standard of living, that same person would need to contribute £219 a month to reach the £560,000 figure by age 66, assuming the same growth and after fees.

Source: Quilter, based on a single person household. The amount of income needed for couples is different.

Source: Quilter, based on a single person household. The amount of income needed for couples is different.

How to prepare for retirement without having to rely on the state pension

Increasing pension contributions

Contributing more to a workplace pension is a good place to start. The total minimum contribution for a UK workplace pension is 8%, made up of 3% from your employer and 5% from you, including some tax relief.

But you can contribute more and some employers will increase their contributions.

If you’re in your 30s, 40s and 50s, consolidating private or workplace pensions can make it easier to keep track of savings and save you money on fees. Be careful to check the features of the pension before you do this though.

Make sure you’re not consolidating one that comes with a guaranteed annuity rate, Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown said.

Guaranteed annuity rates pay out a guaranteed rate. They generally come from older plans and can pay out much more than more modern plans.

Morrissey added: “When looking to consolidate, check whether the [new] provider meets your needs – do they offer the investment choice you want, the educational resources or access to a helpdesk? These can prove extremely important.”

Consider building other investment pots

You can also add money into an ISA, alongside your pension, if you’re after more flexibility in how you can access your savings.

An approach like this can be beneficial for someone who is self-employed and may want to draw on money earlier due to a lack of work and a drop in income.

Morrissey said: “You can benefit from investment growth in a stocks and shares ISA and still access money if you need it – any income taken will also be tax-free. Using this alongside a pension means you still benefit from the tax relief of a pension with the flexibility of an ISA.”

Can you boost your savings?

Make sure you check how hard your savings are working too.

Recent research by savings app Spring revealed £227 billion was sitting in current accounts with over £10,000 in them earning no interest.

If you’re starting saving, it’s a good idea to put the money into a high-paying easy-access savings account and build up an emergency buffer, which you can use for unexpected expenses, such as a boiler breakdown or loss of a job.

Typically, you should have enough in this account to cover three to six months’ worth of essential outgoings such as your mortgage and bills.

Any spare money after this could be put into a savings account or you could invest it. Research has shown investing over the long-term tends to offer better returns than putting money into a savings account.

But remember, investing means the value of your money can go up or down at any time and there are risks attached. You should generally invest any money for at least five years to allow your investments time to ride out any dips in the market.

If you invest, make sure money held in a general investment account or stocks and shares ISA is actually invested, with not too much held in cash or money market funds.

Claire Trott, head of advice at wealth management firm St. James’s Place said: “Allowing it [money] just to sit in cash or cash-like funds can feel safe but they will have their buying power eroded over time by the increase in the cost of living and inflation.”