By Adam Bexson, Senior Consultant
Ask your employees what they want from retirement and you’ll probably get a clear answer – enjoying holidays, hobbies, a new car, and financial security for example. Ask them how much that retirement will cost and the answers become far less certain.
This is a common challenge faced by employers helping their employees prepare for the future.
And that’s what makes the latest Retirement Living Standards so useful. They turn an abstract savings challenge into something more tangible, providing figures your employees can relate to and lifestyles they can picture.
But while these benchmarks can make retirement planning easier to understand, they don’t tell the whole story.
That’s why the most effective workplace pension communications don’t stop at the headline figures. They help employees understand what those figures could mean for their own future.
In this article, we examine what the latest Retirement Living Standards tell us, where the benchmarks can fall short, and how employers can turn headline figures into more meaningful pension conversations.
What the 2026 Retirement Living Standards show
The Retirement Living Standards are intended to help savers understand what different standards of living in retirement may cost.
But for employers and pension providers, they should be treated as a starting point rather than a definitive answer.
Retirement is now more expensive
The latest results show that retirement has become more expensive across all three lifestyle categories: Minimum, Moderate and Comfortable.
| Lifestyle standard | One-person household | Two-person household |
| Minimum | £13,900 a year | £22,500 a year |
| Moderate | £32,700 a year | £45,400 a year |
| Comfortable | £45,400 a year | £62,700 a year |
The update also shows higher costs for London households:
| Lifestyle standard in London | One-person household | Two-person household |
| Minimum | £14,600 a year | £24,100 a year |
| Moderate | £34,000 a year | £47,000 a year |
| Comfortable | £47,200 a year | £64,800 a year |
It is easy to see why these benchmarks attract so much attention. They are widely cited in media coverage and often used in provider tools, member communications and retirement planning discussions.
Employees are not saving enough for retirement
While these standards offer a simple, recognisable way to talk about pension adequacy, they also highlight a broader challenge. While many people may be on track to meet a minimum standard of living in retirement, far fewer are expected to reach the more aspirational lifestyles many imagine for themselves.
Pensions UK’s 2026 update says around 82% of the working population are expected to reach the Minimum standard. This falls to 23% for Moderate and 9% for Comfortable.
For employers and employees, that gap matters. It is not just a pensions challenge. It is an employee engagement challenge.
The limitations of a single retirement benchmark
The Retirement Living Standards, calculated by the Centre for Research in Social Policy at Loughborough University for Pensions UK, are simple, memorable and easy to use in member communications. That is their strength.
It is also their limitation.
The benchmark can help your employees start thinking. But it is not personalised so it cannot tell them what their individual retirement will cost. It does not reflect every employee’s priorities, location, housing situation, health needs, family responsibilities or expectations of retirement.
For some employees, the published figures may feel realistic and motivating. For others, they may feel distant or unattainable, particularly if their current income leaves little room for saving.
And if something feels distant or unattainable, how likely is someone to engage with it?
“Retirement benchmarks are helpful when they make employees pause and think. They become less helpful when they are treated as the answer. Employers can get better engagement by using the standards as a prompt, then helping employees understand what retirement could mean for them personally.”
Adam Bexson, Senior Consultant, Pensions & Savings
What can the Retirement Living Standards miss?
The Retirement Living Standards are a strong starting point, but your workforce is not one group with one retirement journey.
Here are the areas you should treat with care and context.
Housing costs
The standards do not include the largest housing cost for many people: rent or mortgage repayments.
That means they broadly assume someone owns their home outright by the time they retire. If your employees expect to rent, continue paying a mortgage or support family members in later life, their spending needs could be much higher than the standards suggest.
This is particularly important for younger employees, employees in high-cost regions and anyone who does not expect a traditional retirement path.
Tax
The Retirement Living Standards show spending needs. They are not gross income targets. That distinction matters.
People often think about salary and pension income in gross terms, but the standards describe what someone may need to spend.
Since retirement income may be taxed, savers may need more income before tax to meet those spending levels. If this is not explained clearly, employees may underestimate the pension income they need.
Regional differences
London and non-London figures are helpful, but they cannot capture the full range of living costs across the UK.
Housing, transport, care, food and leisure costs can vary significantly by region, town and local circumstances. Your employees may therefore need a more tailored view than a national benchmark can provide.
Changing needs through retirement
Retirement is not one fixed phase.
Spending often changes over time as health, mobility, caring responsibilities and lifestyle choices change. Some people spend more in the early years of retirement when they may be more active. Others may face higher care or health-related costs later.
This is why employees need more than a single number. They need a way to think about how retirement could change across different stages of life.
Current income and affordability
There is also an important question about how retirement targets compare with working-life income.
The Office for National Statistics reported median UK household disposable income after tax of £36,700 in the financial year ending 2024.
That amount sits between the Minimum and Moderate Retirement Living Standards for a two-person household and above the Moderate standard for a one-person household.
Of course, these households are not all the same. They include different ages, family structures and life stages. But the comparison raises a useful question.
Is it realistic to suggest that retirement income needs are close to working-life income for every employee? For some people, yes. For others, no.
That is why employers need to use the standards with care.
What does this mean for employers?
The biggest barrier to pension engagement isn’t pensions. It’s relevance.
Engagement is far more effective when it is relevant to the workforce in front of you.
Your employees are more likely to pay attention when pension communications reflect their pay levels, likely retirement patterns and common financial pressures.
That does not mean every message needs to be fully personalised. But it does mean your communications should feel credible, practical and connected to real life.
The Retirement Living Standards are best seen as a prompt rather than a prescription. They provide a helpful reference point. They also remind us that retirement adequacy is still a pressing issue. But if you want to improve outcomes, you need to go beyond off-the-shelf messages.
You should help your employees understand what the standards mean for them.
How to make your employee retirement communications more useful
Employers can use the Retirement Living Standards to start conversations about pensions and financial wellbeing.
Here are five practical steps you can take.
Segment your workforce
Different employees need different messages.
A younger employee may need help understanding why early contributions matter. A mid-career employee may need a clearer view of whether they are on track. An employee approaching retirement may need more practical support around timing, tax, income options and next steps.
Segmenting your workforce by age, pay, contribution patterns and likely retirement needs can make pension engagement more relevant.
Explain what the standards do and do not show
The standards are estimated spending levels. They are not personalised income targets.
Make that distinction clear. Explain the impact of housing costs, tax and personal circumstances. This helps employees use the figures as a guide, without assuming they give the full answer.
Connect the figures to employee choices
Benchmarks are helpful, but action needs context.
Show your employees how different contribution levels, employer contributions, salary sacrifice or pension matching could affect their future outcomes. Keep the language plain and practical.
Link pensions to financial wellbeing
Pension engagement does not happen in isolation.
Employees may be thinking about mortgage costs, rent, childcare, debt, eldercare or short-term savings. If your pensions message ignores those pressures, it may feel out of touch.
Financial wellbeing support can help your employees balance today’s pressures with tomorrow’s needs.
Make the next step easy
Employees should not have to work hard to find support.
Point them towards pension tools, guidance, webinars, one-to-one sessions or internal resources. Make it clear what they can do next and why it matters.
The opportunity: turn topical pensions update into meaningful action
Pensions UK’s 2026 Retirement Living Standards show the cost of retirement has risen across minimum, moderate and comfortable lifestyles. These figures are, however, not a personal target.
For employers, the opportunity is to use the standards as a conversation starter, then build pension communications around your actual workforce.
The real value is not in repeating the headline figures. It is in helping your employees understand what those figures mean for their lives, their choices and their future. Housing costs, tax, location, health, family circumstances and changing spending patterns all affect what your employees may need.
A benchmark can open the conversation. Stronger communication can move it forward.
When your pension messages are clear, relevant and grounded in real circumstances, your employees are more likely to engage. They are more likely to act. And they are more likely to value the support you provide.
Ready to make pension engagement more personal?
Turn national retirement benchmarks into practical, workforce-specific action. Help your employees understand their choices and strengthen the value of your benefits strategy.
