When can we afford to retire?

This is a favourite topic of conversation for many of our clients. Before they speak to us, they have numerous discussions about what their retirement looks like but are often unsure how much money they need to pay for such a retirement.

What does a comfortable retirement cost? According to the Retirement Living Standards and the number crunchers from Loughborough University, a comfortable retirement today will cost £47,500 a year for a couple and £33,000 for a single person¹.

This equates to having a £600,000 pension pot to provide a guaranteed income for life, plus your full state pension for a single person. And a pension pot of approximately £360,000 per person for a couple², plus their full state pensions.

Pensions are a valuable tax-efficient way to save for retirement. The earlier you start saving and the more money you invest, the greater your financial freedom when you retire. However, when calculating when you can afford to retire, remember to include all savings and income streams.

Paying for a flexible retirement

A potential client summed up how looking at your total pensions, savings and investments can help pay for a flexible retirement.

“I have a personal pension, ISA savings and investments, and I’m fortunate to have an employee pension that will provide me with a regular income. I plan to have an active early retirement, so I’ll need quite a bit of money up front rather than the same amount for 30 years.

“All my pensions and savings need to be invested properly for maximum gain. I like the idea of a secure income, but I also want to be able to drawdown cash tax-efficiently when I need it, for travelling and enjoying hobbies. And I want any investments to be managed by experts who understand what I want from retirement.”

The best way to do that is to speak to a professional adviser. Taking your retirement income is a big decision with tax ramifications that you may not completely comprehend until it’s too late.

If you want help planning your future, or are ready to retire now, please do get in touch.

¹ https://www.retirementlivingstandards.org.uk/
² https://www.retirementlivingstandards.org.uk/How-to-estimate-likely-RLS.pdf