This answer can differ wildly for people. It all comes down to what type of lifestyle you want when you retire. Your golden years can be the most precious time of your life. If your goal is to take holidays, lose yourself in your hobbies, volunteer for important causes, you just need a plan in place and a commitment to follow it.
Research from Which? has shown that a retiree’s household spent just under £2,110 a month, or around £25,000 a year, on average. This covers all the basic areas of expenditure and some luxuries, such as European holidays, hobbies and eating out. Aiming for this as the minimum level of income will provide a good platform for your retirement.
Delving further in to the research, it’s reported that you’d need £40,000 a year if you include luxuries such as long-haul trips and a new car every five years. Your priorities can change slightly as you move through your retirement years though. This can mean spending less on food and drink, housing payments and recreation as you get older.
Beyond leisure activities, it is important to consider day-to-day life when planning your retirement pot:
- You’ll need an income to cover your bills and essentials like food.
- You might want to support your family financially, such as contributing towards university costs or to help fund a wedding.
- Finally, you might want to hold some money back for later in life, in case you or your partner need long-term care.