How much do you need to retire?

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If you’re wondering how much money you need to be able to retire and think you’ve left it slightly late, I hope this post gives you some food for thought!

For one reason or another and mainly because we simply didn’t have the money, we found ourselves in this situation.

I’m happy to say that you haven’t left it to late, but you do need to get a wriggle on. I’d love to know your plans of you’re in the same boat as we are, let me know at the end of this post!

Did you save for a pension when you started work at 18?

Did you diligently put away your 10% and watched as it grew right under your nose?

I didn’t.

I’m one of the 1 in 3 Brits who has to think about saving for a pension later in life.

But what exactly is later in life?

When I was in my 20’s, me now (early 40’s!) was later in life. Ask me now, and it’s maybe mid 50’s, even late 50’s.

Ask a financial advisor when’s late to be saving for a pension, and they’ll draw breath, suck their teeth and tell you early 20’s.

So is it to late to start saving now?

I very firmly believe the answer is no, and I’m going to talk you through my own plans to retire comfortably and how you can too.

How much do I need to retire?

The very first thing I did when I started looking at my financial health was to write down every last penny I owed. I think it’s important to start on an even ground and so clearing my debts was a number one priority.

I started earning extra money through side jobs, saved from my salary and made enough to clear what I owed, alongside living within a strict budget, in just under 2 years.

This website, Debt Free Family was started as a way to record my getting debt free journey, and I still use many of the ways I talk about on there to make extra money. Only now, it’s going towards getting mortgage free and building a retirement fund!

So lets assume you’re debt free and let’s base this on a 45 year old who’s never saved a penny towards retirement.

I will say now that if you have a job where your employer will contribute into a pension on your behalf, it makes sense to me to take advantage of this.  Not doing so would be to throw money down the drain.

If you’re in any doubt, talk to a qualified financial advisor, however for me, this method on it’s own was not going to be anywhere near enough to provide me with the retirement I wanted.

How to retire wealthy if you've not started saving yet! How much do you need to retire? that depends on how much you want your income to be...

Compound interest

There’s one way to make sure you’re going to be able to retire without relying on a state pension, and that’s to take advantage of compounding and the magic of compound interest.

Compounding your savings monthly for 20 years will allow you to retire comfortably.

I chose to save with an Investment ISA with my money invested in an Index. Don’t let anyone tell you it’s not possible to get an 8% return annually. Providing you don’t need your money out within the next few years, there isn’t a better way to save. And don’t forget, your savings will be tax free. Yes, the index’s go up and down, but they’ve averaged over 8% annually since records began. They’re as safe a bet as it’s going to get.

Retirement calculator

How much do you need to save? It depends on what you want to retire on as an annual income. Lets go with the average forecasted UK income for 20 years time, £33,980. In order to be able take this money from your savings, you need to have saved £330,000, or there abouts.

That’s a £600 monthly savings goal. Achievable? Well it depends on your starting point. If you’ve got yourself in a debt free position and have freed up that money you spent on debt repayments, then yes, I think so.

It’s going to take dedication and you’ll likely have to make sacrifices to meet your goal.

Have a look at this chart. It’s a really good visual indicator of where you can be financially in 20 years time. That’s £336,000 in the pot right there, having not saved a penny until the age of 45.

You’d be able to take a £30,000 ‘salary’ tax free, from this savings pot in 20 years time, without even touching the capital.

Pretty amazing stuff.

This graph shows the compound interest you could earn over a 20 year period. The retirement calculator gives you an idea of how much you need to save.

As a side note: the retirement age is likely to be 68 by the time I get there. That’s another 3 years of compounding which would bring your pot up to £448,000, with an annual income of £42,000 (again, without touching the capital).

You’ll see why I find compounding magical!


If you’re not on a budget, you’ll most likely believe that you cannot afford to meet saving payments like these each month. There’s one thing that everyone in this position needs to be doing, and that’s living within a budget.

There are so many benefits to budgeting that once you start, it’s hard to imagine why you never did it.

I’d thought it would be restricting, but I’ve found it to be freeing. I have no guilt when I buy something anymore because I know I can afford it, and I know that I’m still working towards my goals.

Budgeting allows you to know where all your money goes each month and if you’ve ever felt like you’re not in control of your money, a budget changes this instantly.

I’ve talked about living within a budget here.

Of course living costs now come first, but isn’t it worth cutting back on a couple of meals out each month or that city break, to make sure you’re comfortable later on?

I found that going through my monthly outgoings was a game changer. I hadn’t realized just how much money I could save by being on top of insurance renewals and utility bills.

Doing this, coupled with a few sacrifices I knew I was going to have to make at some point, means that I only really have to find half the amount I initially thought I would. It’s a small price to pay for security.

I’m now looking forwards positively instead of with the nagging worry I used to have.

So there you have it. My plan for retirement. Don’t let anyone tell you it’s too late !

2 thoughts on “How much do you need to retire?”

    1. Hello! Thanks for commenting :) That’s the same as me, although I can’t imagine doing nothing ever, I want some security behind us for the future so I can do the things I love! You’ve got a great blog BTW!

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