How much do you need to retire?

A question about : How much do you need to retire?

These are ballpark figures but just to illustrate:-

State pension gives you around Ј5k a year.

If you have Ј300K in pension/ISA's returning roughly Ј15K a year this would give you about Ј20K a year to live on.

Is this right or am I missing something here? (And yes this is all in todays monetary values for illustration purposes).

Best answers:

• Your figures look to be in the right ballpark. State pension will be around Ј7500. On the other hand if you wanted pretty certain inflation matching taking 5% is probably towards the upper end of reasonable.
  This is of course assuming you retire at the State Pension Age. Many people will want to, and possibly need to, retire earlier. As to whether Ј20K-tax is sufficient is something you will need to work out.
• "The number" should be based on how much you need not on how much you have.
  Start with understand what your lifestyle costs - if Ј20k covers it then happy days. If you need Ј100k then it won't!
• I live adequately on well under 10K a year but I am careful with spending, always seeking best deals, eg: using giffgaff, water meter, SORN car when abroad. I have a friend who would struggle on 20K a year as saving is not in his vocabulary, so really it all depends on your mindset.
  I must add that I still have the state pension (6K per annum) and another small DB pension to look forward to as well as owning a large house so I have absolutely no financial concerns for the future.
• I would imagine most retirement incomes are less than Ј15,000 a year.
  The link below from 2012 suggests most public and private sector pensions were a lot less than Ј10,000.
  https://www.bbc.co.uk/news/business-15925017
  https://www.bbc.co.uk/news/business-10912958
• I plan to retire early at 55 on Ј3000/year with a lump sum of Ј20000 and I don't forsee any problems maintaining my current lifestyle.
• It is partly psychological, and partly 'common sense' that when we retire, we need (want) to continue spending roughly the same amount. [Note this is not the same as having the same income].
  Our lifestyle is firmly set by the amount we spend. When we retire, we still want to insure and maintain our house, and keep the gas/electric supply going. We want the same quality of food, the same type of holidays, do the same for Christmas, drive around in the same quality of car.....
  Whether you are a brain surgeon, or a lowly paid supermarket worker, you have the opportunity during the last 20 years or so of working life to manage the cost of your lifestyle carefully so that it can be maintained when you retire. It's basically simple mathematics. Every Ј1 that we choose not to add to our cost of living is another Ј1 in the 'pension fund'.
  We are all individuals with our unique combination of circumstances, income, needs, desires, savings..... When that magic day of retirement comes, it does not turn us into 'zombies' who follow a textbook definition of 'what income we need in retirement'.
• How do you manage to live on that Torbrex? - my council tax alone is almost half of that let alone utilities. Incredibly well done though. I will need all your tips one day as I have a low enough income now but it will be shocking once I retire.
• I'm on a final-salary pension as I work for a university. I get 1/80 of my salary for each year I've worked. I'm on about Ј40k at the moment and have nearly 8 years racked up so I've already got a Ј4k a year pension when I reach 65. I also have a private scheme that I'm paying Ј80 a month into just because I'm wary about relying on any one source and the government chips in to take it up to Ј100. If I leave this sector I'll start paying in 10-15% of my salary to the private scheeme. I should be able to expect about Ј18k a year when I retire, but I'm 39 now so not really worrying too much about it.