Can a couple retire at 60 with £1.25m?
On track On our model, two 60-year-olds retiring today with £1.25m between them could draw a sustainable household income of about £69,400 a year (£5,790 a month) in today’s money, holding that spending power to age 95. That is above the £45,400 the PLSA links to a ‘moderate’ retirement for a couple, by roughly £24,000 a year. You would bridge 7 years on your own savings before the State Pensions start at 67.
Why two people beat one with the same money
£1.25m held by one person supports about £57,000 a year. The same £1.25m split evenly between two supports about £69,400 — roughly £12,400 a year more, or 22%, on identical savings and identical assumptions. Nothing about the investments changed; only whose name the money is in.
The reason is less clever than it is usually made to sound, and it is worth stating plainly because most write-ups get it wrong. Almost all of that gap is the second State Pension. Two full new State Pensions pay about £23,004 a year in today’s money from 67, against £11,502 for one person — an extra £11,502 a year of guaranteed, triple-locked income that owes nothing to tax planning. Set that beside the £12,400 total advantage and about £900 a year is left over from everything else.
At this pot size that remainder is the tax effect, and it is real: £1.25m in one name pushes a single holder toward higher-rate territory, while two people drawing half each stay largely inside their own basic-rate bands. Across the plan the couple’s effective rate is about 6.4% against 10.1% for the single holder. The bigger the pot, the more this matters.
Two things follow. The couple’s total tax bill over the plan is larger in cash terms — about £306,000 against £375,000 — simply because you are drawing much more income, which is not a bad problem to have. And more usefully: this entire advantage assumes both of you have a full National Insurance record. If one of you has significant gaps, most of it disappears, because most of it was never about the pension pots at all. Individual State Pension forecasts are available on GOV.UK, and they are what this figure ultimately rests on.
Pot balance still affects the outcome, just less than the headline suggests. An even split is what uses both personal allowances in full; the more lopsided the pots, the closer the result sits to the single-person figure of £57,000. That is a mechanical consequence of how allowances work rather than the main driver of the gap, which — as above — is the second State Pension.
What the projection shows
For the 7 years between finishing at 60 and the State Pensions arriving at 67, everything comes from your own pots — £625,000 and £625,000 respectively, each split 70% SIPP and 30% ISA. Two ISAs matter more than they look here: they let each of you take tax-free income alongside a modest taxable SIPP withdrawal, which is what keeps the early-year tax bill down.
From 67, two full new State Pensions add about £23,004 a year in today’s money between you, triple-locked. That is roughly 33% of the household income covered before your pots contribute anything — the single biggest reason a couple’s pot stretches further than the headline number suggests.
Questions people ask
Can a couple retire at 60 with £1.25m?
Yes, on our model. Split evenly, £1.25m supports a household income of about £69,400 a year (£5,790 a month) in today's money, sustained to age 95. The PLSA puts a moderate retirement for a couple at £45,400, so you would be roughly £24,000 a year clear of it.
Why does a couple do better than one person with the same pot?
On identical money — £1.25m either way — two people draw about £69,400 a year between them against roughly £57,000 for one person holding the lot: about £12,400 a year more. Most of that is not tax planning, it is the second State Pension, worth £11,502 a year in today's money from 67. The tax split adds roughly £900 a year on top at this pot size, because one person holding £1.25m starts meeting higher-rate tax. Because the gap is driven mainly by State Pension entitlement rather than by the pots, it is sensitive to whether both partners have a full National Insurance record — each partner's forecast is available on GOV.UK.
How much State Pension would we get between us?
Two full new State Pensions is about £23,004 a year in today's money from age 67 — roughly 33% of the household target on its own. Both figures assume a full 35-year National Insurance record each; check both forecasts on GOV.UK, because a partial record on either side changes this materially.
What if one of us has a much bigger pension?
Then the advantage above shrinks. These figures assume an even £625,000 / £625,000 split, which is the best case for tax — it uses both personal allowances fully. The more lopsided the pots, the closer the outcome moves toward the single-person figure of £57,000. Equalising pots between partners before retirement is often the single cheapest thing a couple can do, and it is exactly the kind of thing worth modelling with your real numbers rather than an even split.
Run your own numbers
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