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How much do you really need to retire?

10 June, 2021

There is no set rule for how much money you need in retirement, but it is useful to have a rough guide to help you plan ahead...

Income needs tend to be lower once you stop working, thanks to less money spent on things like commuting.

Homeowners will probably have paid off their mortgage as well, taking a big chunk off monthly outgoings. The same applies to spending on family once the kids leave home - although many people find that their adult children still need to call on BOMAD (the Bank of Mum and Dad) from time to time.

So how might your budget look once you reach retirement?

has tried to answer that question by speaking to thousands of people in retirement to see what they spend:

It calculated that to afford just the essentials, a single person will need around £13,000 a year in retirement, rising to £31,000 to fund a luxury lifestyle.

The figures are higher for a couple, although they benefit from some of the cost savings of living together. A couple would need £18,000 for essential, £26,000 a year to be comfortable, or £41,000 to live in luxury,

With a luxury budget, Which estimates a couple might spend £7,000+ spend on long-haul holidays, enjoy trips to European destinations, have a pot of money for recreation, and healthy food budget.

The lower end of the retirement budget spectrum only covers basic needs like food, utilities and transport.

Use their tool here to get a breakdown of spending based on the ‘essential’ ‘comfortable’ and ‘luxury’ retirement budgets.

The figures could provide a useful guide to what other people spend once they reach retirement, but experts say this should only form a starting point for people to think in more detail about what their own retirement budget should be.

Are you on track with your retirement?

These estimates are a useful guide for people to know the retirement that they are roughly on track for“, says Becky O’Connor, Head of Pensions and Savings at Interactive Investor. “But the amount we should all aim for is very personal and at the end of the day, depends on circumstances and goals, such as whether you want to leave an inheritance.”

Prepare for a drop in living standards if your income falls substantially

“It’s important to think about the lifestyle you have now and how much you would like this to continue when you retire. If your income will be substantially lower, then unless your costs fall dramatically too, you will have to get used to a potential drop in living standards when you stop work.”

Budgeting your retirement spending is just one step in the process too.

Once you have an idea of your potential living costs, you’ll need to think about how obtainable these are and whether you have sufficient pension savings. That means working out how much you currently have, projecting what sort of income it might deliver in retirement and then deciding if you need to start saving more to get on track.

If you’re thinking about how much you need in retirement and whether your pension is up to the job, here are some steps to think about:

Check your state pension forecast

You can go online to see how much you can expect to get from your state pension. Use the government website here ( This will tell you if your National Insurance record has any gaps that could impact how much you get. You’ll also be able to see your state pension age, which tells you when it will start paying out. Use these figures to start thinking about the income you’ll have available from the state pension, and how much more you need from private savings to afford the kind of lifestyle you want.

Consider consolidation

Lots of people have multiple pension pots from different providers. Some of them may be charging more than others and it is difficult to track how much they’re worth when they’re split across several accounts. Consolidating them together could save you money on fees, as well as making it much simpler to get a clear idea oh how much you’ve got in total. To consolidate, pick the provider you want to use (check out some of our favourites here ( and then speak to them about the transfer process. You’ll need the details of your other pensions and will have to complete some forms confirming you want them transferred to the new company, which sadly can be a slow process. Sometimes with certain types of pension you’ll need to speak to a financial adviser before the transfer can take place.

Make your investments work for you

If you invest in a pension or an ISA you’ve probably seen lots of warnings about the risk of investing. This is critical and companies have to make it clear to your that the value of your money can fall. But what they tend to struggle to make clear is that investment risk is also a good thing, because you can also be rewarded for taking risk. The key thing to know is that in the short term (that’s the next 4 or 5 years in investing terms) investment returns will fluctuate and you really need to be able to keep your money invested over at least that time period. Over the long-term, however, investment risk should reward you, and evidence shows that having some investment risk in your pension pot is likely to be crucial if you want to grow your money. But some workplace pensions tend to be quite cautious, and it might be worth looking at the investment choices to see if you are comfortable taking on more risk, especially if you’re still a long way from retirement and can accommodate a bit more ‘volatility’ now in exchange for a higher likelihood of a larger pension in the future.

Speak to an expert

Although rules of thumb like these are handy, it really is just a starting point. You shouldn’t rely entirely on generalisations and other people’s experiences, because yours will be unique. You need to work out how much you want to have to spend, when you want to retire, whether you can downsize your house, how much extra you can afford to save now, and what financial commitments you might have in retirement. This differs from one person to the next and tweaking one part of the plan can drastically impact other areas – for instance, retiring just a year or two earlier can make a huge difference to the amount of money you need to achieve your desired income goal. You might want to think about seeing a financial adviser to help with this. Retirement planning is complex and hugely important to your overall quality of life, so spending some money to get help might be a wise investment. You can find out more by heading to Boring Money Advice (, where our quiz will help you get a sense of the options.