The thought of finally being able to retire from work can fill some people with joy, but it can also be a source of great anxiety. It’s all well and good to dream of long summers, vacation homes and big family vacations, but how much money do you need to start a new life without a paycheck?
An often-cited rule of thumb is to multiply your salary by 10 while you are active. But your goals will depend on when you want to quit your job, how healthy you are, and what you want to do in retirement.
“A decade ago, defined benefit pensions meant people had a guaranteed income for the rest of their lives, so they didn’t have to worry about running out of pension income,” said Ian Cook of asset manager Quilter. .
“Today, in the world of defined contribution plans, you have to carefully balance how much money you want to have in retirement and how long you want it to last.”
Below, Telegraph Money explains how you can prepare for a comfortable retirement and why options like early retirement and care costs make you want to save more.
How much does a comfortable retirement cost?
The table below shows how much pension income experts think you need each year, depending on your lifestyle. Generally speaking, if you want a ‘moderate’ retirement income, with a few vacations a year in Europe and an occasional treat for yourself, you’ll probably need an annual income of around £23,300 after tax. Deaf experts think. This assumes you own your own home.
The industry sets this amount at around £37,300 if you want a more comfortable lifestyle. On the other hand, a bare-bones retirement requires only £12,800.