How much does a single person need to retire comfortably?<\/h3>\n\n\n\n
A comfortable retirement. What does that really mean? Comfortable for one person could be champagne breakfasts and private jets. For another, it\u2019s golf once-a-month and a Sunday lunch at the pub. The idea of a \u2018comfortable retirement\u2019 is EXTREMELY subjective. <\/p>\n\n\n\n
We are all different.<\/strong><\/p>\n\n\n\n Which? says that a comfortable retirement<\/strong> for a single person costs around \u00a320,000<\/strong> per year<\/strong>. This includes European Travel\/holidays, Buying new clothes and Recreation\/Leisure. <\/p>\n\n\n\n Their estimate for a luxurious retirement <\/strong>for a single person costs around \u00a333,000 per year<\/strong>. Including eating out, leisure membership and long haul travel.<\/p>\n\n\n\n However another estimate by Tilney says you need \u00a326,500 per year for a comfortable retirement. Royal London says, \u00a317,500. The Department for Work and Pensions says you only need \u00a316,817. <\/p>\n\n\n\n In reality. Experts can\u2019t agree. Either on what constitutes a \u2018good\u2019 retirement income for a single person (estimates vary between \u00a310.2K to \u00a335K per year) or what \u2018comfortable\u2019 retirement even means. <\/p>\n\n\n\n It\u2019s important to remember that these are averages and estimates, and may not include for expenses, which you might consider essential.<\/p>\n\n\n\n You are an individual. <\/strong><\/p>\n\n\n\n When working out how much you need to comfortably retire as a single person our advice is that you consider yourself just that. A single person. An individual. Unique. With retirement needs unlike anyone else. <\/p>\n\n\n\n Simon Garber, owner of 2020 Financial and a retirement specialist with over 16 years experience says \u201cWe have customers who only need \u00a310,000 per year in retirement. Others who want \u00a3100,000\u201d.<\/p>\n\n\n\n \u201cEqually, We have customers who never really want to stop working. Others who can\u2019t wait for full retirement. Some have dependents and mortgages that will run well into their retirement years. Some are debt and dependent-free.\u201d <\/p>\n\n\n\n Everyone\u2019s circumstances are different<\/strong>. <\/p>\n\n\n\n In truth, Simon Says \u201cyour lifestyle should be the most important factor when starting to calculate how much you need to retire\u201d. <\/p>\n\n\n\n It\u2019s about lifestyle.<\/strong> <\/p>\n\n\n\n What do you like to do? How do you like to live? What does your ideal retirement look like? These are the things that should form the basis of your planning. You can\u2019t rely on someone else\u2019s research or pension calculator to determine the things you are then able to afford in your retirement. <\/p>\n\n\n\n Start thinking about your lifestyle now to help you start planning for the future. <\/p>\n\n\n\n Which? says that a comfortable retirement<\/strong> for a single person costs around \u00a320,000<\/strong> per year<\/strong>. If you budgeted for this, it would include such things as: <\/p>\n\n\n\n It also assumes you have paid off your mortgage. That you are dependent-free (or that your kids have flown the nest). But it doesn\u2019t factor things in such as: <\/p>\n\n\n\n When calculating the cost of your single-person retirement income, online tools and research aren\u2019t always your friend. <\/p>\n\n\n\n If we use the Which? <\/em>research (quoted in this article) as an example. It was based on interviews with just 6,000 people. That\u2019s 6,000 Which?<\/em> members. A very narrow cross-section of society. <\/p>\n\n\n\n The research pool also consisted of both retired AND semi-retired people. And since Semi-retired generally spend less money on leisure, a figure that then increases in full retirement, this could skew their results. <\/p>\n\n\n\n There are lots of ways in which your retirement costs and needs might vary wildly from those interviewed \u2013 You might live in a different part of the country than those questioned, with higher or lower living costs. Or your lifestyle and spending habits could be very different. <\/p>\n\n\n\n Retirement planning is the biggest investment you are ever likely to make. Which is why we always recommend working with a professional. <\/p>\n\n\n\n That said, there are a few easy things you can do, to start to calculate your own personal retirement needs. <\/p>\n\n\n\n There are lots of different ways you can make a good guess at your retirement income needs. One is Target Replacement Rate which works out the amount of money you will need in retirement to maintain your pre-retirement living standards. <\/p>\n\n\n\n This is based on the assumption that retired individuals generally spend a bit more on leisure and travel, a bit less on commuting, supporting children and mortgage costs etc.<\/p>\n\n\n\n So if your pre-retirement income was \u00a390,000 per year. You should aim for a retirement income of around \u00a363,000 per year.<\/p>\n\n\n\n As a general rule, your Replacement Rate figure would be around 70% of your pre-retirement income. This is also sometimes known as The two-third\u2019s Rule \u2013<\/em> the goal of having around two-thirds\u2019s of your pre-retirement income. <\/p>\n\n\n\n The Target Replacement Rate gives you a quick, albeit crude, way to estimate your retirement needs. However, it\u2019s important to note that this figure is based on the assumption that you will have paid off your mortgage<\/strong> by the time that you retire. <\/p>\n\n\n\n And a report commissioned by Royal London actually estimated that around one-third of retirees may eventually end up renting. These costs can amount to around \u00a36,554 a year (with UK rental prices rising every year for the last 10 years, and due to rise a further 15% by 2023). So unplanned rental costs could seriously compromise your retirement fund.<\/p>\n\n\n\n If you are renting or will still have a mortgage it\u2019s important you factor in these additional costs. <\/p>\n\n\n\n The younger you retire\u2026 the longer you\u2019ll be living off your retirement fund.<\/p>\n<\/blockquote>\n\n\n\n The Pension Freedoms announced in 2014<\/a>, allow you to access your private, defined contribution pension from the age of 55. The new rules allowed greater flexibility for how much you could take and how you were able to take it and gave people access to 25% of their pension as tax-free cash.<\/p>\n\n\n\n Obviously, in light of the new rules, there has been a greater uptake of those seeking to retire at 55. With people living well into their 80s and beyond, early retirement poses a particular challenge depending on your single person retirement pension needs.<\/p>\n\n\n\n When calculating how much a single person needs to retire at 55 there are many things to consider. <\/p>\n\n\n\n Living Longer <\/strong><\/p>\n\n\n\n The average life expectancy for a woman is 89, and for a man, 86. If you retire at 55, that means your retirement fund needs to last around 15 years longer than someone who retires in their late 60\u2019s. Many online retirement calculators assume people are retiring at 65. That could be 10 years of expenses not budgeted for! <\/p>\n\n\n\n Higher Outgoings <\/strong><\/p>\n\n\n\n Your financial outgoings will fluctuate during your retirement years. The younger you retire, the more likely you are to still have higher outgoings. Mortgages may still need to be paid off. Children may still be in education. <\/p>\n\n\n\n Still active <\/strong><\/p>\n\n\n\n Retiring younger also means you should be more physically active. There is much out there to enjoy! You could end up spending more money in earlier retirement on things while you are still active enough to enjoy them. Safaris and skiing spring to mind! But it may be global adventures or a variety of more active pursuits. <\/p>\n\n\n\n Most retirement calculators don\u2019t take these things into consideration. So it\u2019s important you factor them in. These outgoings will tail off as you progress through your retirement. But then other costs can begin to increase, such as the cost of care or medical costs. <\/p>\n\n\n\n State Pension <\/strong><\/p>\n\n\n\n At 55, you will not yet qualify for your state pension. But the state pension is sometimes factored into online pension calculators. The state pension for a single person equates to around \u00a3160.18 per week for a man (\u00a38,329 a year) and \u00a3152.55 per week for a woman (\u00a37,933). If your retirement budget includes it, you will already be down around \u00a38,000 per year for the first 10 years of your retirement. <\/p>\n\n\n\n That\u2019s a big miscalculation! <\/p>\n\n\n\n Everything that might impact a 55-year-old could also impact how much a single person needs to retire at 60, although helping older children through University might now be a case of helping them on the property ladder or assisting grown children financially.<\/p>\n\n\n\n No State Pension <\/strong><\/p>\n\n\n\n At 60 you would still not qualify for state pension. So it\u2019s important you don\u2019t factor it in at this point. Which?, for example, includes the state pension in its retirement savings calculator. So when using online tools make sure you read their small print. Otherwise you could end up with a hefty shortfall in your planning. <\/p>\n\n\n\n Embrace the complex <\/strong><\/p>\n\n\n\n Retirement planning for any age is complex. Your retirement will not fit into any standardised box. That said, what we know for sure, is that your lifestyle should always be the most important factor when starting to calculate how much you need to retire. <\/p>\n\n\n\n Working with a professional will help you create your ideal retirement lifestyle AND plan for life\u2019s unexpected expenses. <\/p>\n\n\n\n When you reach the current UK state pension age at 66, if you’re eligible, you’ll start receiving your state pension. It’s usually assumed that you’ll have paid off your mortgage, so \u2018in theory\u2019 you should have more income and fewer outgoings to fund from a private pension. <\/p>\n\n\n\n If you want to calculate how much you might need to retire at 66 then there is an abundance of retirement calculators for you. Most factor in receipt of a full state pension, which you may now (or nearly) be eligible for. <\/p>\n\n\n\n But that\u2019s about as personalised as they get. <\/p>\n\n\n\n How much you need to retire at 66 rather than 55, 60 or even 70 is still entirely dependent on your outgoings and the type of lifestyle you intend to live.<\/p>\n\n\n\n In truth many people have mortgages that run into their 70\u2019s. Kids return home. Grandkids arrive. And The Bank of Mum & Dad<\/em> is still one of the UK\u2019s biggest lenders<\/a>. <\/p>\n\n\n\n In actual fact, regardless of how simple the budgeting may appear in the research, there are all manner of other larger costs that can frequently appear, and unexpectedly, but are a necessity.\u00a0\u00a0<\/p>\n\n\n\n Which is why it\u2019s time to get personal.<\/p>\n\n\n\n If you’re single, you don’t have the retirement safety net of a partner’s pension, savings or assets, so it’s all the more important that you ensure your financial security for retirement whilst you still have the ability to plan ahead.<\/p>\n\n\n\n![\"Single](\"https:\/\/www.2020financial.co.uk\/app\/uploads\/2018\/10\/Single-person-retirement-cost-estimates-Which-2020-683x1024.png\")
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Beware of the research \u2013 The Which? Retirement Cost estimates<\/h3>\n\n\n\n
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<\/figure>\n\n\n\nEstimate your retirement needs with Target Replacement Rate<\/h3>\n\n\n\n
![\"Target](\"https:\/\/www.2020financial.co.uk\/app\/uploads\/2018\/10\/TRR-1024x509.jpeg\" "\\"TRR")
<\/figure>\n\n\n\nHow much does a single person need to retire at 55?<\/h3>\n\n\n\n
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How much does a single person need to retire at 60?<\/h3>\n\n\n\n
How much does a single person need to retire at 66?<\/h3>\n\n\n\n
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Getting personalised retirement advice <\/h2>\n\n\n\n