How much do you really need to retire?

One of the big questions that people often come to me to ask is ‘how much do I need to be able to retire?’.

This is one of the most difficult questions to answers quickly because everyone is different and has their own unique situation. The answer to the question is dependent upon:

  • lifestyle and hobbies
  • fixed and regular expenditure
  • desirable regular expenditure
  • future capital expenditure
  • other existing sources of current/future income

But are there any guidelines or reference points that you can consider?

Yes – the Pensions and Lifetime Savings Association produce a Retirement Living Standards output based upon independent research by Loughborough University to try and help people to picture what kind of retirement lifestyle people could have and the costs associated with that, broken down by area as well as overall.

This currently indicates that a single person requiring a ‘minimum’ lifestyle would require £14,400 per annum, whereas a couple requiring a ‘comfortable’ lifestyle would require £59,000 per annum.

These are based upon a prescribed lifestyle which is not personalised to you and your circumstances but make for an interesting reference point.

Once you know the amount a rule of thumb is to multiply the amount of income required by 25 – indicating a withdrawal rate of 4% could be sustainable for 30 years. The origins of this come from multiple academic studies including the Trinity Study, but do not take into account changes in income streams at different points (such as state pension commencement).

Whilst the above are both interesting and good reference points, they are not guaranteed to answer the question. Ultimately the only way to really know is to undertake a detailed financial planning process which is then updated regularly to account for changes!


Source: PSLA Retirement Living Standards February 2024