{"id":7020,"date":"2021-11-13T05:17:00","date_gmt":"2021-11-13T05:17:00","guid":{"rendered":"https:\/\/www.2020financial.co.uk\/?page_id=7020"},"modified":"2023-08-23T15:23:48","modified_gmt":"2023-08-23T14:23:48","slug":"how-much-do-i-need-to-retire-guide-2","status":"publish","type":"page","link":"https:\/\/www.2020financial.co.uk\/how-much-do-i-need-to-retire-guide-2\/","title":{"rendered":"How much do I need to retire guide"},"content":{"rendered":"\n\n\t

NEED HELP WITH RETIREMENT PLANNING?<\/p>\n

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\n\t\tHow much do i need to retire \n\t<\/h1>\n\t\t\t\n\t\t\t\t\t\t\tHelp me calculate\n\t\t\t\t\t<\/a>\n\t

Schedule a free discovery call with an Independent Financial Advisor (IFA)<\/p>\n\t\t\t\n\t\t\t\t\t\t\tSCHEDULE A FREE CALL\n\t\t\t\t\t<\/a>\n\t\tTABLE OF CONTENTS\n\t\t\t\t\t\n\t

Updated 23 August 2023.<\/p>\n\t

The latest research (published in 2023) suggests that the minimum amount you’ll need every year in retirement is \u00a316,996 for a single person or \u00a326,113 for a retired couple.<\/strong><\/p>\n

Of course, no one wants to survive on the bare minimum; Afterall, your retirement is your time to really enjoy the things in life that matter to you. It’s important to approach your retirement planning with a more personal approach: relying on estimates will never work in your favour.<\/p>\n

That’s why we’ve put together this handy guide to help you work out how much you’ll need to retire for your own unique circumstances.<\/p>\n

\n\t\tHow much do I need to retire?\n\t<\/h2>\n\t

The amount of money you’ll need to enjoy a comfortable retirement is subjective, however, the latest estimates from the Pensions and Lifetime Savings Association range between \u00a312,800 to \u00a337,300 for a single person and between \u00a319,900 and \u00a354,500 for a couple.<\/strong><\/p>\n

Estimates can be useful in early retirement planning but remember, they are based on averages and they won’t suit everyone.<\/p>\n

Essentially, you need enough money to last you an undisclosed amount of time.\u00a0 You need enough funds to cover your basics, but also to allow for comforts and luxuries such as gifts for loved ones, holidays, a new car, having a dog (or three!), hiring a cleaner, a golf membership, yoga classes… The list could go on and on.<\/p>\n

It is better to base your retirement plans on your existing or expected standard of living.<\/p>\n

Don’t forget that there will always be those unplanned expenses. Household repairs and unexpected healthcare bills need to be paid for somehow.<\/p>\n

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\n\t\tMinimum Income Standards for retirement\u00a0\n\t<\/h2>\n\t

The Pensions and Lifetime Savings Association (PSLA) publish updated minimum income standards for retirement every couple of years.<\/p>\n

The recommended minimum income standards are based on the minimum amount an individual (or couple) would need to live and be part of society. Think of it as the retirement equivalent of the basic living wage.<\/p>\n\n\t\t\t\n\t\t\n\t\t\t\n\t\t
\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tRetirees\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tMinimum\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tModerate\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tComfortable\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t<\/tr>\n\t<\/thead>\n\t\t
Single<\/td>\u00a312,800<\/td>\u00a323,300<\/td>\u00a337,300<\/td><\/tr>
Couple<\/td>\u00a319,900<\/td>\u00a334,000<\/td>\u00a354,500<\/td><\/tr>\t<\/tbody>\n<\/table>\n\t

The current full state pension for 2023-24 is \u00a310,600. As a couple, if you both qualify for the full state pension, you’ll have enough income in retirement to cover your basic needs, but as a single person, the state pension alone would leave you short.<\/p>\n

\n\t\tTarget Replacement Rate for retirement income\n\t<\/h3>\n\t

Target Replacement Rate was created by the Pensions commission as a way of estimating how much individuals will need in retirement to maintain their pre-retirement living standard.<\/p>\n

For example, take someone who – pre-retirement – was earning \u00a333,280 (the UK average income 2023<\/a>). Target replacement rate states that they would need 67% of their pre-retirement income to continue living in the same way.<\/p>\n

In comparison, anyone earning over \u00a362,800 would need 50% of their pre-retirement income.<\/p>\n

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\n\t\tTable: Pension Commission Target replacement rates\n\t<\/h3>\n\n\t\t\t\n\t\t\n\t\t\t\n\t\t
\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tOverall 2004 income band\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tIncome band in 2021 earnings terms\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\tTarget Replacement Rate\t\t\t\t\t\n\t\t\t\t\t<\/th>\t\t<\/tr>\n\t<\/thead>\n\t\t
Up to \u00a39,500<\/td>Up to \u00a315,000<\/td>80%<\/td><\/tr>
\u00a39,500 – \u00a317,500<\/td>\u00a315,000 – \u00a327,500<\/td>70%<\/td><\/tr>
\u00a317,500 – \u00a325,000<\/td>\u00a327,500 – \u00a339,300<\/td>67%<\/td><\/tr>
\u00a325,000 – \u00a340,000<\/td>\u00a339,300 – \u00a362,800<\/td>60%<\/td><\/tr>
Over \u00a340,000<\/td>Over \u00a362,800<\/td>50%<\/td><\/tr>\t<\/tbody>\n<\/table>\n\t

Target replacement rate can be a useful way of calculating how much you’ll need to retire, but it isn’t perfect; especially if you want to enhance your standard of living in retirement, are renting or plan to continue supporting dependant children or family.<\/p>\n

In addition, the post-covid ‘working from home’ era means that many people have already made major savings on their commuter costs, and the original Target Replacement rate calculation assumptions can be flawed.<\/p>\n

Post-covid, retirees can expect to pay far more for small luxuries such as UK travel, theatre tickets and eating out. In fact, research has found that retired couples will need an average of \u00a32,200 per year extra to enjoy the small luxuries that we all look forward to in retirement.<\/p>\n

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\n\t\tCalculating a comfortable retirement amount\n\t<\/h2>\n\t

The latest retirement living standard figures<\/a> from PSLA suggest that a couple now needs roughly \u00a354,500 a year to enjoy a comfortable retirement, while a single retiree should aim for an annual budget of \u00a337,300.<\/p>\n

The issue is, this is entirely subjective. It doesn’t take into account a person’s individual circumstances, their hope for those golden years or what standard of living they are used to.<\/p>\n

What is seen as a ‘good‘ <\/a>retirement income depends on an individual’s expectations for retirement, and this is influenced by their life experiences and any changes that they hope to live out during their golden years. These expectations could include:<\/p>\n