Queen Elizabeth II 1926 - 2022

Planning for retirement is no easy task as this is related to lifetime earnings and anticipated needs in later life. People’s needs, or their perceived needs, vary widely.

However, there are some facts and figures which can be used to ascertain the minimum amount of money you would need to be able to retire in 2023.

Researchers at Loughborough’s Centre for Research in Social Policy have created a set of “retirement living standards” that have swiftly become the industry benchmark for what pensioners need in retirement.

Its researchers say that the minimum standard of income you currently need as a single person is £12,800, or £19,900 for a couple, according to the 2022 figures published at the start of this year.

Working out what you will need in retirement

However, these figures are based on averages and don’t provide an accurate picture of the amount of money needed for you to be able to retire.

The first question is ‘How much do I need to retire’ based on living costs and outgoings.

This includes housing costs, food, and drink, transport and holidays, and leisure. Estimating these figures gives a better picture of these ongoing costs.

Once again, these variables will vary widely. Many people considering retiring may have paid off their mortgage and own their home outright. This provides an advantage when factoring in living costs.

For most people, the baseline for working out their retirement income is the state pension, which for 2023 is £10,600 per year.

Adding to this baseline are private pensions, savings, or investments that you might hold. In many cases, people’s largest asset might be their own home.

This will then give you a rough estimate of where you stand when considering retirement.

As a general rule of thumb, you need 20 – 25 times your retirement expenses. So, if you spend £30,000 per year, you’ll need £600,000 – £750,000 in pensions, investments, and savings to be able to retire.

Looking for advice on later life planning? Get in touch today.