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How Much Money Will I Need To Retire?

In this article, Dennis Hall discusses how much money you need to retire at different levels of lifestyle, where your income comes from, how life expectancy affects it.


There is a considerable lack of awareness around how much money a person needs to be able to retire comfortably. Worryingly three-quarters of UK adults don’t know how much is in their pension whilst 1 in 6 over 55s have no pension savings at all! I’m guessing that if you’re reading this you are someone that does have some idea of what their pension is worth, but is it enough?

There are a number of ‘rules-of-thumb’ you can employ to determine how much money you need to retire.  The two-thirds rule has been used for some time. Meaning you’ll need a retirement income of two thirds of the income you had whilst working. We discuss ‘rules of thumbs’ in more detail in our Century Plan Podcast.

Another model involves multiplying your working salary by 10 to calculate how big a pension pot you will need to accumulate to fund your retirement. But the actual amounts can differ considerably depending on your individual lifestyle and the age you want to retire.

Ultimately, the earlier you stop working, the more money you will need to fund your golden years. In this article, I delve into the key considerations to help you determine how much you need to secure an enjoyable and sustainable retirement.

How much money do I need to retire comfortably?

Retiring comfortably clearly means different things to different people, and depends on the lifestyle they lead now and the lifestyle they want in retirement. But a starting point is to consider our current lifestyle and decide if we’d like to maintain, upgrade, or simplify it during retirement. Assessing potential expenditure, such as travel, hobbies, and healthcare, will help to give a clearer picture of the financial resources needed for a comfortable retirement.

Defining the lifestyle you’d like to lead during retirement is a crucial step in determining your financial requirements. Working with a qualified financial planner to assess your retirement needs will help you create the plans to achieve them.
Dennis Hall - Founder & Chartered Financial Planner, Yellowtail

What Are The Retirement Living Standards?

In January 2023, the Pensions & Lifetime Savings Association (PLSA) released an update to their annual Retirement Living Standards. This provides a benchmark of the kind of lifestyle we can expect at retirement across three different income levels: minimum, moderate and comfortable.

The report shows that a single person in retirement would need:

  • £12,800 a year for a minimum lifestyle;
  • £23,300 a year for a moderate lifestyle;
  • £37,300 a year for a comfortable lifestyle.

And couples would need:

  • £19,900 a year for a minimum lifestyle;
  • £34,000 a year for a moderate lifestyle;
  • £54,400 a year for a comfortable lifestyle.

What is a moderate lifestyle?

According to the report, a single person living a moderate lifestyle requires an income of £23,300 a year. This would allow £74 a week to be spent on food and £791 per year on clothes and footwear. It would allow you to replace your three-year-old car every ten years. If you want a holiday, you could have two weeks in Europe and a long weekend in the UK every year. This budget also allows you to pay for some help with maintenance and decorating and to spend £34 on each birthday present you buy.

You’re probably thinking that this might be describing the average person with a moderate lifestyle, but it doesn’t reflect me. Our expenditure will also be influenced by where we live, not just the type of home we have, but whether it’s in the countryside or the middle of a town or city. We each have different hobbies and leisure activities, and the number of birthday presents we buy is also different from one person to another. But one of the biggest factors affecting retirement income is life expectancy.

How will life expectancy affect my retirement income?

Longevity risk is one of many types of risk we consider during the financial planning process. And we have discussed the topic of longevity in an episode of The Century Plan Podcast which you can access here.

Anyone born this Millennium has a better than even chance of living to age 100. Even if you’re a 60 year-old there’s a good chance you’ll live beyond 90. Rather than looking at the previously accepted 20-year retirement time horizon, we now need to plan for what could be a 30 or 40-year retirement.

Of course, this directly affects the amount of capital we need in our retirement pot.

Anyone who retires at 66 – the current state pension age – and lives until they’re 80, will need £215,000 in their pension pot, in order to have a moderate retirement.

Those who end up living into their 10th decade, so anything above 90, would need a pension pot the size of £450,000. So that’s more than double what you’d need if you were to die at age 80.

How do I work out my own retirement income?

Calculating your retirement income involves a thorough assessment of your current financial situation and future expectations. You can start by listing all your potential sources of retirement income, such as pensions, investments, and other assets that can be drawn on.

Consider factors like inflation and potential market fluctuations that may impact your income over time. Utilise retirement calculators or consult with a financial planner to create a realistic projection of your retirement income, ensuring that it aligns with your lifestyle goals.

This is an image of a professional woman assessing her pensions.

Where will my retirement income come from?

Here are the main sources of income that you can draw on at retirement:

Workplace Pensions:

  • Assess your workplace pension contributions and review the performance of the pension fund.
  • Check that you have not been placed into a default pension fund, and whether there is any automatic ‘life-styling’ applied. This is where your fund is gradually switched out of growth assets like equities, and into defensive assets like cash and government bonds.
  • Understand how your workplace pension is funded and whether it is enough, look at both employer and employee contributions.

Personal Savings:

  • Take stock of your personal savings, including savings accounts, cash ISAs, and other liquid assets like Premium Bonds and other National Savings accounts.
  • Consider the impact of inflation on the real value of your savings over the course of your retirement. Does your money keep pace with inflation, not just the gross interest rate, but the net return after tax.


  • Review your investment portfolio, including shares, investment ISAs, investment bonds, and other non-cash holdings including any rental property, and other valuables that could be sold to provide a return.
  • Regularly review the performance of your investments and if necessary adjust your strategy based on market conditions and financial goals.

Stability and Reliability:

  • Assess the stability and reliability of each income stream, don’t let short-term returns influence your long-term thinking. There is a temptation to take short performance and extrapolate this into the future, both good and bad.
  • Factor in any significant changes to government policy in areas like taxation and pension legislation.
  • Diversify across different types of asset to mitigate risks associated with individual investment or systemic market risk.

Consistent Cash Flow:

  • Try to create sources of capital gain and income streams that will provide a reasonably consistent cash flow throughout your retirement.
  • Don’t forget about inflation, whilst you may not be able to achieve a truly index linked increase every year, you do need to invest in a way that delivers a rising ‘income’ over time (I’m using ‘income’ to describe both capital gains and true income received by the portfolio).
  • Factor in potential changes in expenses, such as healthcare costs or travel plans, when assessing the sufficiency of your cash flow. This will include irregular capital expenditure, such as replacing cars as well as major home repairs and renovations.

Diversification and Protection Against Challenges:

  • Diversify your sources of ‘income’ to spread risk and create better financial security.
  • Have a mix of short-term and long-term assets to balance stability and growth potential. Always keep some cash to fall back on when investment markets take a tumble. You need time to allow them to recover without eating into the ‘seed corn’.

What is in my pension pot?

Your pension pot is likely to be a significant component of your retirement income. Find out the current value of your pension, including any workplace pensions, personal pensions, or other retirement accounts.

Understand the investment strategy of your various pension funds and evaluate its performance over time. Older pensions are often held in poor performing and expensive funds, and maybe subject to ‘life-styling’ described earlier.

Regularly review and adjust your pension contributions to take account of promotions and pay increases. Pension planning is never a one-off exercise, and it needs to be adjusted to keep on being aligned with your retirement income goals.

Should I consolidate my pensions?

If you have several pension accounts from previous employers you might consider consolidating them into a single pot to simplify your retirement planning and provide better control over costs and the investment strategy.

When evaluating the pros and cons of consolidating multiple pension accounts, consider factors such as fees, investment options, and the overall performance of each pension scheme.

Consolidating pensions may offer a clearer overview of your retirement savings, and provide simpler and more effective financial management during your retirement years.

How can I find out how much state pension I will get?

The State Pension is also likely to be a large slice of the income you receive in retirement. The amount you’ll get depends on how many ‘qualifying’ years of National Insurance payments you have made. This includes National Insurance contributions that you pay when you are working and contributions that are credited to you when you are unable to work.

The easiest way to find out how much you will get is by checking your pension statement at the GOV.UK website:

How can I make sure I have enough money in retirement?

A financially secure retirement requires ongoing monitoring and adjustments to your financial plan. Consider working with a financial planner to assess your retirement needs and the plans you have in place to achieve them. Taking a proactive approach to your retirement planning will help you navigate uncertainties and to avoid unpleasant surprises.


Founded by Dennis Hall, Yellowtail are the trusted financial planners who advise individuals & families across the UK. Yellowtail’s experts provide the clarity, control and confidence to guide you through financial planning, estate planning, pension transfers and investment management directing your journey towards a prosperous retirement and financial peace of mind.