What is Your Number?
- Chris Young
- Mar 19
- 3 min read
The answer to the question of how much money you need for your retirement, and how you get there, would depend on a variety of factors such as:
• When do you wish to retire?
• Fully or partially?
• What does your lifestyle in retirement look like?
• State pension due?
• Value of private pension / pensions?
• Value of other savings and investments?
• Other income
• Assets
Whilst it will no doubt feel like a statement of the obvious it should be noted that we are all different as are our lifestyles, assets and incomes.
Some will have already made a start due to auto enrollment by saving into a workplace pension scheme and some may already have started saving into a personal pension as well. Others may benefit from a defined benefit pension scheme from their employer. However, outside of the public sector these are increasingly rare beasts.
Some of you will also have designs to have fully repaid your mortgage by your intended retirement date and may also have additional savings and stocks and shares.
Even assuming you have already made a good start to the life you wish to lead once you can choose to stop or reduce your workload, the following are the most common questions we are asked:
When can I afford to retire?
How much do I need to live the life I want in retirement?
Will this be enough?
To be able to bring some clarity a full analysis of your financial position, a detailed breakdown of income and expenses and with the use of our cashflow modelling software we can drill down and begin to provide answers to those important questions.
Nevertheless, the Pensions & Lifetime Savings Association (2023) produce an annual review and have tried to put some general numbers in answer to the question. It is a useful discussion point.
Yearly expenditure needed for living standards in retirement
Assuming that you wish at the very least to lead a comfortable life as defined by the Pensions & Lifetime Savings Association, the question is where do the funds come from?
From 2028 the State Pension Age will be 67 and will rise to 68 in 2038. Assuming you have made the necessary National Insurance contributions, you will receive a full state Pension which from April 2025 amounts to £230.25 per week or £11,973 per annum.
For a couple therefore, in today’s terms, you will have a combined income of £23,946 leaving a shortfall of £35,054 to made up from your Workplace/personal pension and/or savings and investments.
Using crude arithmetic, you would each require £22,000 gross income on top of your state pension to achieve a comfortable standard of living.
How big a pension pot is required?
If you were to use the ‘guidance rule’ of only withdrawing 4% per annum – deemed to be a ‘safe withdrawal rate – you would require a pot of £550,000
What if I live longer?
What about inflation?
What about care home fees?
For a detailed income in retirement calculator see: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/use-our-pension-calculator
How can we help?
Initially by listening to your goals and aspirations and how you picture the rest of your life.
Once we have gathered the required basic information from you, we will set to work;
Collating all the wider information, assessing the suitability and costs of any existing investments, and carrying out the required calculations in order to put together your bespoke plan to help you achieve your goals
Produce a detailed cash-flow model following an in-depth analysis of your income and expenses which will clearly visualise your financial journey towards your goals.
Implement the plan
Once in place, we will monitor your investments and ensure everything is operating in line with your goals and objectives
Our periodic reviews allow us to assess any changes to your circumstances or goals, as well as any market or legislative updates, and then to adjust the financial plan accordingly.
and critically be flexible enough to respond to the changes and challenges that life throws our way
Take a closer look at: www.xvwealth.co.uk
Get in touch: info@xvwealth.co.uk
The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change and their value will depend upon personal circumstances.
The value of pensions and investments and the income they produce can go down as well as up and you may not get back the full amount that you originally invested.
The Financial Conduct Authority does not regulate Cashflow Planning.