How much pension do I need for £20,000 a year?
The pension pot for £20,000 a year
The full new State Pension in 2026/27 is £241.30 a week, which is about £12,548 a year, and it goes up each year. You need 35 qualifying years to get it in full. Take it away from the income you want and the rest must come from your own pension, savings or work.
Target income £20,000, State Pension £12,548
| Withdrawal rate | Pot needed for the gap |
|---|---|
| 3% | £248,413 |
| 3.5% | £212,926 |
| 4% | £186,310 |
| 5% | £149,048 |
Before income tax. The 4% rule is a guide, not a guarantee.
How much to save each month
To build £186,310 from nothing, the monthly amount depends on how long you have and the growth you earn. These figures are what goes into the pot, including tax relief.
Reaching £186,310
| Years to save | Monthly at 5% | Monthly at 4% | Monthly at 6% |
|---|---|---|---|
| 15 years | £704 | £762 | £649 |
| 20 years | £459 | £512 | £411 |
| 25 years | £318 | £366 | £275 |
| 30 years | £228 | £272 | £191 |
| 35 years | £168 | £207 | £136 |
Saved at month end. Returns are not guaranteed.
Tax-free cash and tax on the rest
Up to 25% of the pot can usually be taken tax-free (to a limit of £268,275 for most people). The rest is taxed as income, so your take-home income will be lower than the figure above unless it is within your personal allowance.
Ways to improve the answer
- Get your State Pension forecast on GOV.UK and fill any gaps in your National Insurance record.
- Take the full employer contribution available through your workplace pension.
- Start earlier or pay more as your pay rises: time matters more than anything.
- Consider working a little longer or part-time to cut the pot you need.
Sources and further reading
Questions people ask
How much pension do I need to have £20,000 a year?
How much is the State Pension?
Is the 4% rule safe?
Results are estimates for information only, not financial advice. Read the full disclaimer.