Having enough money when you stop work
Can you afford to retire?
How much have you saved for your retirement? If you don't know, what are you expecting to live on later in life?
Start by checking that any current savings and investments you hold are tax-efficient - and are likely to grow to provide the income you want when you're older. Get a UK State Pension forecast and see how much extra you'll need to afford the lifestyle you want.
If you've never made pension investments before, we’ll show you how. Get a reality check with our retirement planning tools.
Your life once you stop work
What kind of life would you like to lead when you've said goodbye to the 9-to-5? Create a vision of your ideal retirement using the icons below, and we'll give you an idea of how much money you'll need to fund it.
What you could have
What you want
Experts say that you need around 2/3 of your income to live comfortably in retirement.
To fund the lifestyle you've just chosen, you'll need per year before tax.
Where does that £10k figure come from?
The Joseph Rowntree Foundation (JRF), a respected charity, recently asked members of the public what counts as a minimum acceptable standard of living – one that includes more than just essentials such as food and somewhere to live.
Based on these answers, JRF worked out what income people need to achieve this – which was around £10,000 a year for a single retired person.
What the £10,000 includes
This assumes that, come retirement, people should still be able to buy birthday presents, have a week's holiday in the UK, take six day trips a year, buy alcohol and visit the cinema. They should also have some of the things we take for granted now, that we didn't used to: mobile phones, DVD players and fridge-freezers, for instance. It also assumes that they'll have paid off their mortgage.
What it doesn't include...
There were some things that weren't seen as necessary for an acceptable lifestyle once you retire. The £10,000 assumes public transport, not a car. And it assumes no internet access, no dishwasher, no cigarettes, no paid-for sports or film channels – and spending less than £20 a month at a restaurant.
How to use these figures
Some of the figures in the research vary depending on whether you're a man or a woman – retired men are assumed to need to spend £3.70 a week on clothing and footwear, and women £6.13. The figure of around £10,000 is for a single person – a retired couple need about £14,500 a year between them (as it's cheaper for two people to live as a couple).
And these figures are only a guide. Everyone's idea of what constitutes an acceptable standard of living is different – if you live in a remote village, for instance, there may be no mobile-phone reception and the internet may, instead, be seen as essential to stay in touch with people.
You can read more about the research at www.jrf.org.uk/publications/minimum-income-standard-2010
How we work out the figures
The final figure we show is higher than the sum of the options you've selected. This is because it's based on the amount you would need to earn, before tax is deducted, to pay for the items you've chosen. We've based our calculations on a single person aged 65-74 years, paying 20% tax with a personal allowance of £9,940.
2-week holiday each year
The £10,000 figure for basics assumes a one-week UK holiday. If you want European sun, we've assumed you'll spend £2,000 on an all-inclusive holiday for one .
4 weeks in the sun each winter
You can beat the winter blues without spending a fortune. The £3,700 we've quoted is for a four-week stay (self-catering) in a Florida apartment for one person, including flights and £300 spending money a week.
A car + 5-yearly upgrade
A car that costs £15,000 new will set you back £2,624 in running costs each year. And if you want to replace it every five years, you'll have to save £3,000 a year towards it.
Health club membership
If you like to stay in shape, you'll have more time for exercise. Whether you like to raise your heart rate on the treadmill, pump iron or practise pilates, joining a health club will cost you around £500 a year.
A concert, play or show once a month
The £1,200 figure covers a ticket for one, a train fare and a meal 12 times a year.
Weekly dinner or drinks with friends
If you like to go out now, that's not likely to change when you stop work. We've assumed £40 every other week for dinner out, and £30 every other week for drinks out – total £1,820 a year.
Shopping trips for you + your family
We've put down an annual figure of £1,500 – whether you spend it on the latest gadgets or the latest fashions is up to you.
Home improvements
Running repairs, redecorating, new fixtures and fittings... we've allowed £3,000 to keep your home looking good.
This example is not designed to be specific to your personal circumstances. Its purpose is to act as a guide to help you understand the income you might need to fund the lifestyle you want. Figures are based on today’s costs for such a lifestyle and do not take into account inflation.
