How much you need in retirement will vary on many different factors but is something that you need to work out for yourself so you know both what you are aiming for and the lifestyle that you can expect once you retire.
How much you are planning to save for retirement depends on the lifestyle you wish to lead, but the usual figures are around 70% of your current income to maintain your current lifestyle. So if you are currently earning £30,000 you will want to have around £21,000. The Times state that you need 25x your annual spending. So if you want to spend £20,000 per year in retirement, for example, you will need a pot of £500,000. They say that this will enable you to take 4% a year from the £500,000 without it affecting the principle.
What you plan on doing in your retirement will affect how much money you will need. If you want to take lots of luxury holidays, for example, or live a lavish lifestyle then you will need a much larger pot of cash. If you are looking to live a more simple life, and are prepared to carry on budgeting, then you will be able to get by with a much smaller retirement income.
Single or Couple
Depending on whether you are single or in a couple this will affect the retirement figure that you will need. In a recent study, PensionBee found that single people spent £19,000 a year and couples spent £26,000 a year to achieve a comfortable lifestyle. Something to note, of course, is that the majority of the people in the study are likely not to have retired early so that’s something to consider.
What do you intend to do when you retire? If you plan on continuing working in some capacity such as part-time or on your own business then you will need less in retirement savings.
If you still have some debt or have not yet paid your mortgage then this is something you will have to take into account for how much money you will need in retirement. If you have no house payment then you will have a lot more money left to play with at the end of the month.