Use our Retirement Calculators to
work out how much you need
to save for retirement
How much money do you need to retire on?
Impossible to answer? Perhaps. However with our retirement calculators, using different scenarios, we will give you a good idea how much money you will need in order to live comfortably in your retirement.
It's All About Spending Less Now?
Cut your spending now and you'll retire comfortably? No way! Don’t kid yourself into thinking that your spending is going to
“naturally” decline rapidly when you retire. It won’t.
When you retire, you have more time to spend money and therefore it's much easier to start spending more rather than spending less. Also, as you get older, you may want to help your kids or grandchildren and increasingly you may also have added medical expenses and increased personal care costs.
Some people claim that you'll need only 70 per cent of your pre-retirement yearly salary to live comfortably. That may well be enough if you've paid off your mortgage and are in excellent health when you retire.
But what if you plan to build your dream house, holiday around the world, or get that Ph.D. in history you've always wanted, you may need 100% of your annual income - or even much more?
Unless you have a "plan" or are already near(ing) retirement, you can’t possibly know how much money you need in retirement - how much will you be spending on average on a monthly basis. Somehow you must make a realistic estimate on what you’ll be spending in retirement.
Once you have a good understanding what your likely expenses will be in retirement, then you will have some idea what you need per annum in order to live in comfort.
That's the number you're after!
Suppose you decide that £36,000 per annum will
keep you in good stead
When you retire, (hopefully) you’ll have State Pension. For our example, let’s assume you are entitled to State Pension totalling approx £7,000 per annum. You're therefore £29,000 short in order to meet your annual income needs.
So, how much do you need to save for a comfortable retirement?
The next step is for you to decide how mouch money your assets will need to generate - for instance 5 per cent, per annum (say from interest income or from dividends yielding 5 per cent).
Using 5 per cent might seem like a high number right now. Interest rates are much lower now, though there are still many solid 5 per cent dividend payers out there. It’s not reasonable to expect that interest rates will remain this low over the remainder of your life.
Anyway in the
below, I have pre-set your expected annual return at 5 per cent. You now just need to insert the amount you require per annum.
Remember our example, above - we need £29,000, so insert 29000 and click: calculate