How much does a single person need to retire?
Hmm, that depends on what you want retirement to look like.
You could have essential, comfortable or luxury needs and wants, all of which will require different funding levels.
Of course, if you don’t know how much you need or want and just leave it to chance, you might well find that you need to make some dramatic, uncomfortable changes to fit your life around the limited finances you do you.
If that doesn’t sound like a good plan, read on to hear how you can plan, save, and invest your way to a comfortable retirement.
How much money do I need to retire as a single person?
The only way to figure this out is to understand what you think good or at least adequate looks like.
What sort of lifestyle do you hope to have in retirement, and what will it cost in terms of time, money, and effort to get you there?
And as with most things, it’s much better to figure this out sooner than later.
The later you figure this out, the greater the potential is for this to be a very steep uncomfortable and risky climb to complete.
According to WHICH, a single person will need something like:
- Essential lifestyle = £13,000
- Comfortable lifestyle = £19,000
- Luxury lifestyle = £31,000
How does that sound to you?
Or, more likely, the above figures don’t look that great as you have no idea how to generate that income in retirement.
The above figures may well come from a few income sources.
- State pension
- Private or work-based pension’s
- Other investments like ISA’s
- Rental properties
- Side hustles or businesses
- Assets you own that earn an income
The above balance will depend on what savings, investments and income sources you have built up over time.
Depending on when you want to retire, state pension age sooner or later may well affect which of the above sources you can access and when.
How much is enough money to be happy?
To figure out how much money you might need to be happy, you need to know a few of your numbers.
- Your net worth is everything you own minus everything you owe – this is your starting point.
- How much do you spend a year? This tells you what sort of lifestyle you are currently living.
- What’s the difference between what you earn and spend? This is your savings rate and gives you an idea of what life is costing and what room there is to increase or lower your lifestyle.
With these numbers, you can begin to guesstimate what retirement might cost.
Trigger warning, a wall of numbers are about to come at you.
The 4% rule is often used to figure out a yearly income or fund needed to retire.
Imagine you spend £30k a year.
To earn £30k a year, you would need £30k x 25 = £750,000.
4% of £750k = £30k.
But if you were to include the full state pension of approximately £9k, this would drop to £30k-£9k=21k.
£21k x 25 = £525,000.
£525,000 x 4% = £22k
This is if you wanted to build up a large fund of money in pensions or other stock market-based investments.
You could, of course, create income from several sources well into your retirement, including:
- Rental properties
- Part-time work
- Coaching or consultancies
- Online sources including, bogging, YouTube, podcasts, eBay and selling products or courses you have developed.
Now all you need to figure out is what makes you happy, what it costs, and where the money will come from.
Easy peasy, right?
Start planning for a great retirement
Often people think of retirement as something they have to fit their plans to.
Occasionally, people say the cheapest retirement I can afford – that doesn’t sound like much fun.
Neither may saving every single penny between now and retirement so a happy medium needs to be found.
You will need to be conscious of your current needs and your potential needs in retirement.
How can you be kind to your current and future self?
Screwing your future self with no savings and investments is not something you’re going to thank yourself for in the future.
What does a great life look like now and in the future? What goals do you have?
What do you want to be, do or have now and in the future?
- Health – mind and body
- Wealth – material things as well as savings
- Social – time for friends, family, hobbies and interests
- Community – giving back and making a difference wherever you are.
Understanding what these are now and might be in the future will give you a clear path to a great life and retirement.
And help indicate what does a good life and retirement cost.
Save more, spend less, track what’s going on
Saving more of your take-home pay should help give you more options.
Options to do more of what you love now and in the future.
Remember saving is just future spending stored up.
You haven’t lost the money; you are going to spend it just later.
Could you increase your future savings by spending less on things you don’t really need or enjoy?
Often a quick review of your bank account or using an app can indicate where money is slipping through your fingers without much return on it.
You worked hard for your money; make sure you get to keep some of it by paying yourself first. i.e., save first and then spend what’s left, not the other way around.
Saving into pensions has some advantages in that you can get your hands on it until you are 57, and in most cases, the government will pay you back some of the taxes you paid on earning it (FREE MONEY).
Once you have an emergency fund in place – 3-6 months of living costs to ride out any bumps in the road and cash for things you expect to pay for the in the next 5 years you might want to consider investing in the great companies of the world.
Investing has the potential to maintain and grow your wealth much better than just cash savings over the long term.
Cash savings are being eroded by inflation all the time, so some longer-term planning would be good for any “spare” cash.
Create more income
Do you have the skills, experiences and know-how to create a side hustle?
Are there things that you are
- good at
- love doing
- the world needs
- And people will pay you for
Are there things that you love doing others hate? Will they pay you to take that pain away?
What problems might you solve that people would gladly pay you for?
If you could match all of these in a full time, part-time or side hustle capacity, you might find that you can generate enough income to make work optional one day with time.
This side hustle might also create an ongoing income into your retirement so that you don’t have to save up a huge fund to retire on.
Likewise, you could consider the above in terms of the job you already have.
What skills would make you more valuable and able to command a better salary?
What could you do for your manager, team or company that would make you indispensable and ripe for the next promotion?
Start living like you always want to live
Hoping that one day you will be free from work to do all that you have wanted might be a bet you don’t win.
As you get older, not everything may work as it used to.
What might seem like a great idea in your thirties, like backpacking around Asia forever, might not be so appealing when you are 60.
Keep your options open by saving what you can to create opportunities now and in the future.
Ticking off some of the big items of the bucket list as you go along with help keep you going and make sure that they are not all stored up for when you retire.
This is where a life plan would be very beneficial. You can see what you need to do and when to create the life you have always wanted to lead with a plan.
A life plan will help you plot out what you would like to do in every area of your life, what it will cost, and where the money will come from.
By the way, our GAME Plan programme helps people understand their Goals, the Actions they need to do, the Means they have or need to create and an Execution plan.
Put together; this is a powerful plan to create well in every area of your life.
FAQ: how much does a single person need to retire?
How much does the average person retire with UK?
Can I retire at 55 with 300k?
You could – it might see you with an income of around 12k using the 4% rule. You could increase the withdrawal rate to life off more, but it wouldn’t last as long.
Can you retire on 300k? read more here
What is a reasonable amount of money to retire with?
That all depends on what you think is reasonable? £10k, £20K or more?
Some say your retirement income should be about 80% of your preretirement income.
But this all depends on what you want your lifestyle to look like in retirement.
Have you or are you saving enough, and if not, are you prepared to take a lifestyle cut in your old age?
Find out more about retirement plans here
How can I retire with no money?
Continue working full or part-time
Rent out any properties you own or have, i.e., a room, garage or space you have.
Make sure you are maximizing any state pension or help you can get.
No money for retirement – read more here
How much does a single person need to retire in the UK?
According to WHICH! a single person needs £19000 to live comfortably and £31k to live in luxury in 2022. Of course these figures will change over time but gives you an indication of the type of incoem you need to be
How much does a single person need to retire comfortably?
WHICH! has calcuated that a single person needs an income of £19000 per year for a comfortable retirement. But that all dpends what comfortable means to you.
The best thing to do is to make your own detailed life and financial plans so they fit your lifestyle rather than trying to fit your lifestyle around a smaller figure.
Summary: How much does a single person need to retire?
So, we have it according to WHICH you need an income of about £31k in retirement to have a luxury lifestyle.
Maybe you don’t need this type of lifestyle, but it might be worth keeping your options open to it.
That doesn’t mean saving up everything for your old age, but it might mean making a plan to make your current and future selves well looked after.
Figure out your goals, the actions needed to reach them, and what means/money you need to have or create and then execute your plan for a great life now and in the future.
A lifestyle of comfort, dignity, independence, and choices now and in the future will be a lot better than poverty in your old age.
Anyway, those are my thoughts on how much a single person needs to retire in the UK.
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More of the same?
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