Help! How much do I need to retire?

This must be the biggest of all the retirement questions. And the answer is different for everyone. 

Almost half of over 50s say they don’t feel adequately prepared for retirement. One of their main reasons is the worry they haven’t saved enough*.  So how much is enough? 

To answer the biggest question, you’ll need to think through some smaller ones. Read on to discover how you can get to your own number, with our Retirement Planner.

What does retirement mean to me?

Close your eyes and imagine your future retired self. Are you relaxing or taking on new challenges? Are you living in a different place? Maybe you’re pursuing old or new hobbies, travelling, or spending time with family and friends? Would you like to work part time or do volunteer work? There are no right or wrong answers – just think about how you’d like your retirement lifestyle to be.

What will my lifestyle cost?

We could start by looking at your current lifestyle expenses. Then we could make some adjustments for your new retirement lifestyle. Then allow for inflation and average life expectancy. 

To get you in the ballpark, The Pension and Lifetime Savings Association (PLSA) has come up with some estimates. It suggests a single person would need £14,400 a year as a minimum, £31,300 for a moderate lifestyle or £43,000 for a more comfortable lifestyle.  

These are based on UK averages, so think about how you might be different from average. For example, do you want to live in an expensive neighbourhood? 

How much would I need in savings to achieve my lifestyle?

We think a single person retiring at 65 years old (with a full state pension) would need at least £65,000 in investments to achieve the PLSA’s minimum lifestyle**. For the moderate lifestyle we’ve estimated a minimum of £455,000 and £763,000 for the comfortable. Keep in mind you may not need all that money upfront. Some of it could come from investment growth over the course of your retirement.

When would I like to stop or reduce my work?  

Once you have a ‘how much do I need to retire’ number in mind, you can think about how (or if) you’d like to reach it. 

Think about your health and life expectancy – a 50-year-old female can now expect to live to 87.  How do you feel about your work? Would you like to do it for many more years? Going part time or doing consultancy work are increasingly popular options. The number of people age over 65 in paid work has increased to record levels, driven by part time workers.  You may even like to do something completely different like start a new business.

What money do I have now and how much might it be worth in the future?

If you’ve been working and paying national insurance, ask for a state pension forecast. Then look at any savings and investments you have, such as pensions or ISAs. And (hopefully) what rate they’ve been increasing at. 

There’s more to this than just how much money you’ve saved though. You’ll want to make sure you keep more of it by paying less tax. ISAs and pensions are a tax efficient way to save for retirement, so take advantage of these tax-saving opportunities up to the limits the government allows. 

When you’re ready to retire, plan a tactical take out. For example, you can reduce your tax bill by spreading out your pension income over different tax years, and mixing it with tax-free ISA cash. 

Important: Any money invested in a pension, stocks & shares ISA or GIA could rise and fall in value. Returns are not guaranteed – you may get back less than you put in.

How can I achieve a retirement I’m happy with?

There’s more than one way to plan and enjoy your retirement. You’ve got options. You could increase your savings, change your lifestyle plans, alter your retirement date, or decide to work reduced hours to name a few. 

* Source: Retirement Sentiment Index, Surviving Market Volatility, April 2018, Retirement Advantage

** Source: HUB Financial Solutions, June 2024