How Much Money Do You Need to Retire in the UK?
There are many techniques and formulas that financial advisors provide to their clients on how much they should be saving to retire comfortably. But what is the actual amount of money you need to save to enjoy a comfortable life in retirement in the UK? Let’s check the stats to get a better picture.
How Much Money Do You Need to Retire in the UK in 2023?
The average weekly retirement income of British pensioners under 75 is £393 or, in annual terms, £20,436 per year. A simple calculation will show you that you will need to have a total pot of £613,080 from all sources, including your pension, by the time you retire to receive the UK average retirement income for 30 years.
(Gov.uk)
Additional Useful Data on Retiring in the UK
Merely learning what is the average retirement income in the UK and how much you should save up to ensure it isn’t all that illuminating. Let’s have a look at some more data on retirement savings in the UK and get more details that will help you correctly set up your retirement goals.
The lowest amount of money needed to retire in the UK is £77,350 in a pension drawdown.
The above amount translates to a £13,000 annual retirement income, which according to a recent survey, is enough for lone pensioners to afford the essentials. Alternatively, you can achieve the same retirement goal by buying a £123,365 annuity plan.
(Which)
A single British retiree can live comfortably with £19,000 per year.
The money you need to retire with such income is a pot of £192,290 alongside your state pension or £305,710 through an annuity. On the other hand, retired couples would need a £26,000 annual income to live comfortably, and to reach this retirement goal, they would need a £155,000 pot, or a £265,000 joint life annuity, alongside their state pensions.
(Which)
Retirement saving of £442,000 in drawdown is enough for couples to enjoy a luxurious retirement.
Please note that the above figure jumps to £589,000 if the couple has already taken the whole 25% tax-free lump at the outset. The joint-life annuity is another viable option, which requires an initial fund of £757,000 to reach this retirement goal and provide the couple with enough money to retire in luxury. The yearly retirement income with such savings adds up to £41,000.
(Which)
A single retiree would need a total of £500,000, including benefits, to retire comfortably at 55.
Given that the average life expectancy of Brits is 81, and you need £19,000 for a comfortable retirement, you can retire at 55 with a pot of £500,000 from all sources. If you stay within the £19,000 spending range, it will last you 26 years. However, if you are in no rush, you can retire comfortably at 60 with £400,000 or save just over £300,000 to retire at 65.
(Joslin Rhodes)
A couple would need £416,000 to retire comfortably at age 65.
Since couples need £26,000 a year for a comfortable lifestyle in retirement, with £416,000 in savings, they will be able to spend exactly that much for 16 years. For retirement at age 60, they would need £546,000, and for early retirement at 55, £676,000 should be enough. If you decide to retire abroad, that sum might be even smaller.
(Joslin Rhodes)
Conclusion
Saving for retirement is one of the most important aspects of adulthood, though it can be hard to imagine just how much money you need to be comfortable in old age. Luckily, some stats and calculators can help you set your retirement goals correctly and achieve them sooner rather than later.
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