When considering how much you’ll need to retire, it’s important to bear in mind that is a difficult and personal decision that will depend on the lifestyle you’ll want post-retirement, your current financial situation, and how long you plan to be retired for.
How much you need to retire does not, therefore, have an easy answer. But in this blog, we’ll go through some of the considerations to get you started.
Check out the link to see how they break this down in more detail.
When discussing how much you need to retire, the ‘Minimum’ will cover essential spending with relatively little left-over for extraneous activities. Note that the full ‘New State Pension’, with 35 qualifying years of National Insurance Contributions (the minimum years needed for maximum entitlement) provides £230.25 a week, or £11,973 p.a.
It’s also important to bear in mind that your retirement income is taxable just like employment income, so factor that in when estimating how much you’ll have to live on in retirement!
A “Moderate” retirement will provide “More financial security and flexibility” according to the Retirement Living Standards, allowing for spending increases in all categories, such as traveling, eating out, and takeaways.
A “Comfortable” retirement can allow for greater expenditure on luxuries and will offer a much greater degree of financial security and freedom for your retirement.
What will your financial position look like when it comes to retirement?
A good place to start when thinking about how much you need to retire is considering your financial position at retirement, including how your outgoings will change. Many people use their retirement to spend more on holidays and general leisure activities. So when thinking about how you’ll need, it’s a good idea to work out what that could look like for you, and more importantly, how much it would cost to maintain such a lifestyle. When it comes to how much you’ll need to retire, keep in mind that it’s likely that your mortgage will either be completely paid off, or at least significantly paid off by this point. Therefore, your housing costs may be reduced compared to during your working life. Speaking of working life, any work-related expenses no longer need be worried about in retirement. Lunches at the hospital and commuting to see patients are no longer a cost to you! Note that other costs may increase, such as healthcare and heatingHow much will I need to retire if I’m single vs a couple?
Below is a summary of how much you could (personal circumstances excluded) need in general to enjoy retirement, from Pensions UK.| Minimum | Moderate | Comfortable | |||
| Single | Couple | Single | Couple | Single | Couple |
| £13,400 | £21,600 | £31,700 | £43,900 | £43,900 | £60,600 |
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