2nd April 2022

How Much Do I Need To Save To Retire?

Five questions to help you live your life, the way you want to in later life. 

The question, ‘Have I saved enough to retire?’ is an extremely difficult one. It does require a lot of information about you, your family, your income needs in retirement, and an understanding of the financial products available for saving and investing before it can be properly answered.

It is hard to know exactly how much you will need in later life because everyone has different circumstances and different expectations. But by planning how much you’ll need, and working out how best to build up your pension pot, you will be in a much better position to live your best life in later life. Most people know they should save money to fund their retirement but they may not know or fully understand how much they should be saving in order to retire and be comfortable. Below you will find some frequently asked questions, which you may find helpful.

Q1: WHAT WILL MY LIFE LOOK LIKE WHEN I RETIRE?

While this might seem obvious, it is very easy to forget about all of the little details when thinking about retiring or what your daily life will look like after retirement. Your budget is aimed at having a certain standard of living now, while working. Will that standard of living carry over into your retirement years? Will you need to reduce your spending? Or will you be able to enjoy more of the finer things in life after you retire?


Q2: HOW MUCH AM I CURRENTLY SAVING TOWARDS RETIREMENT EACH MONTH OR OVER A YEAR?

This will always be a good metric to know how well your current savings are holding up, especially since you can compare it with other metrics later on. Saving early means your money is invested for longer and has more time to grow – and any returns your savings make are also reinvested and have a chance to grow too. If you know how much money you are saving for retirement now, it’s easier to estimate how long it will take before that particular goal has been reached.


Q3: HOW WOULD MY DAILY LIFE CHANGE IF I HAD LESS INCOME COMING IN?

By looking at your current income and your expenditure now, you can start to get a picture of what life would look like with a smaller income. Your expenses will likely decrease as you retire if it’s only necessary to pay for the essentials, such as housing, household bills and food. You may be in a position to save more or spend more on things that make you happy (within reason). If most of your lifestyle doesn’t change much after retirement, chances are that you are doing ok with your savings. But be mindful that people are living longer than ever, and that will create some challenges once retired.


Q4: HOW LONG WILL MY MONEY LAST IN RETIREMENT?

This is where it can start to get very complicated because there are several considerations involved: How much money do we plan to live on each month (including all expenses)? How long will that money need to support us? How much income would we expect to have throughout retirement? It may take several years of research, but being aware of your ‘magic number’ for retirement is a good way to see how well you are doing with saving. Turning your dreams into reality will take careful planning and budgeting. Once you’ve got a good idea of your life expectancy, pension pot and any other retirement income, we can help you make an informed decision about when the right time to start your retirement is likely to be.


Q5: HOW CERTAIN CAN I BE THAT MY SAVINGS ARE ENOUGH?

No one has an exact answer to this question, how much money they should be saving towards retirement – the situation is different for every person. Knowing your savings can help you better understand whether or not it’s enough for your individual needs. This metric may require some consideration about what type of lifestyle you want in the future, what expenses will change or will no longer be there, and how long you might live if nothing changes. Retirement can be a long time, so it is very important to think about how you plan to spend your golden years. The common perception is that you will need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire. 


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Woodward Markwell Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FCA). You can confirm this by visiting the FCA website www.fca.org.uk/register. The firm’s reference number is 146449.
Our registered address is: Friars House, 2 Falcon Street, Ipswich, IP1 1SL. Registered in England No. 2492078