How much do you really need to retire?

Ask ten people how much they need to retire and you will get ten different answers, most of them guesses. The honest answer is that the right figure is personal. It depends on the life you want to lead once you stop working, not on an average.

Start with your spending

The most useful place to begin is not your pension balance but your spending. What will your life cost once you stop working? Some costs fall away, such as commuting and the mortgage. Others rise, particularly in the early, active years when people travel and enjoy their time. Setting out your expected spending turns a vague worry into a clear target.

It helps to think in three layers: the essentials you must cover, the comforts that make retirement enjoyable, and the extras you would like but could manage without. Once the essentials are secure, the rest can flex with how your investments perform.

Add up what will pay for it

Next, bring together everything that will fund that life: your private and workplace pensions, the State Pension, ISAs and other savings, and any income such as rent or part-time work. Seeing it all in one place is often a relief, because people are frequently better placed than they feared.

Map it out before you decide

We use cash-flow planning to project your income and spending across your whole retirement, allowing for inflation and the occasional poor year for investments. It shows, in plain numbers, whether your money is likely to last and what level of spending is sustainable. It also lets you test changes before you make them, such as retiring two years earlier or working part-time for a while.

So how much do you really need to retire? Enough to fund the life you want, for as long as you live, with a sensible margin for the unexpected. That figure is personal, and it is knowable. Your first meeting with us is at our expense, so if you would like to find out yours, it is a good place to start.