How Much Do I Need to Retire?

How Much Do I Need to Retire?

Retirement Planning in the UK

UK Employees are now being urged to start financially planning for their retirement right at the beginning of their careers. This is a shift in behaviour from their parents’ generation that was far more likely to enjoy the prospect of a Final Salary Pension Scheme and an inflation-linked State Pension as well. Now even 20-30 year olds are now having to consider the question, ‘how much do I need to retire?’.


In this article, Harpur Wealth Management advisors look at ways to assess your financial needs in retirement, the potential sources of your retirement funds, and ways you can increase the income you get once you stop work.

How Much Do I Need to Retire?

This is, of course, a highly subjective consideration. There is the ‘survival rate’ – what you need to cover bills and basic living expenses, then there’s what you need to fund the quality of lifestyle you desire.


It’s probably relatively easy to work out how much you need to fund the way you live now. Simply look at your monthly income, and then the amount you have left over at the end of the month. Subtract the one from the other and you have your monthly expenditure. Once you retire that amount may fluctuate a little dependent on your plans; perhaps you’re planning to travel abroad more frequently or spend more time entertaining.


A useful way to calculate the average income you will need each month when you retire is to work on the basis that you’ll spend around two-thirds of the amount you currently earn. This isn’t an exact science, but it gives an indication. Once you have a monthly figure, you’ll need to multiply it by 12 to get an annual figure, and then by 25 to arrive at the sum required to cover your retirement.


How Will You Fund Your Retirement?

When you retire you will still have an income; this is made up of state pension payments, your final salary pensions, dividends, any rental income you may have, and the interest on your savings. These will all come into play at different times so you will need to take this into consideration when assessing your overall income.


Aside from your income, you will also have capital. This may take the form of private pensions, investments or saving accounts which you can draw down on, or can be used to provide a monthly top-up to your income. You need to bear in mind when planning how to use the capital you have, that the more you withdraw, the faster it will diminish.


Planning to Retire Early?

If you do your calculations and find that you have enough money to fund your lifestyle throughout retirement, then you’re in a position to be able to retire earlier than the State Pension Age.


Retirement may seem like a final step away from work, but that’s no longer the case. There is no barrier to returning to work should you find that you wish to, after you’ve enjoyed a few years of retirement.


What If I Can’t Afford to Retire?

If you find that you don’t have enough money to retire, there are always options to increase the funds you have. This may mean that you are unable to retire as early as you hoped but knowing exactly how much you need, and having a clear plan by which to achieve it, adds momentum, even if you’re working longer than you had intended.


Professional Guidance When Planning for Retirement

We’ve laid out the basic principles of retirement planning, but as you will now appreciate, there are no easy answers to the question which we started this article with: How much do I need to retire? Your income, and your plans for retirement are unique to you. That’s why we would recommend seeking the advice of a wealth management advisor


Harpur Wealth Management retirement planning service is designed to ensure that you have enough money to enjoy the retirement you’ve planned and worked hard for. A personal retirement planner will create a tailored retirement plan which fulfils your retirement needs. We’ll also ensure that your current financial arrangements are yielding the optimum returns for you.

Working With Harpur Wealth Management

Our wealth management advisors take time to get to know our clients so that we can build up a realistic picture of their pre-retirement situation and their post-retirement needs. Then we will work with you to create a plan which will fund the retirement lifestyle you desire. This may include guidance on pensions, savings and investments.

If you feel that you would benefit from our retirement planning, why not book a free consultation today with a Harpur Wealth Advisor? Call us on 01234 924620 or use our online form.


This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.


The value of your investment can go down as well as up and you may get back less than the amount invested.


‘The Financial Conduct Authority does not regulate taxation advice’

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