How much income do I need to be able retire? Well, how much do you spend?

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August 19, 2021 - Paul Hubbert

How much income do I need to be able retire? Well, how much do you spend?

When approaching retirement age, we often see a shift in how people approach money. There is a period of time when retirement is on the horizon, but there can be uncertainty about how much income pension savings will provide and a lack of clarity on how that money will be taken. It is often a big mental step to move away from the reliability of receiving an employed income to being financially self sufficient.

‘How much money do I need?’ is a question financial advisers often get asked. When we then ask the client how much income they need each month, they typically don’t have an answer.

This is because is no magic number, but we work with our clients to establish how much they spend now and determine how much they may need in the future. It can take some time and thought to go through this process.

There is no fixed retirement age: from the age of 55, people have options and choices about how they make the transition away from their working life.

Whether you can retire early comes down to finances.

Those approaching retirement will typically have spent many years working, earning and saving. There is a financial rhythm to that, with money coming in and money going out without much thought, as the cycle repeats ad infinitum.

The starting point to establishing how much income you need to retire is working out how much money you are currently spending. It can be a shock to the system to write down and tally up everything that goes out of your bank account each month.

It is then important to review that list and possibly make some significant decisions. Do you have savings which could be used to pay off your mortgage? Would it be a good idea to cut back on your spending now in order to clear credit cards or loans in preparation for the future? Do you have other financial commitments, such as university fees, which will end shortly?

Do you have home improvements or large spends on the horizon like buying a new car? Do your outgoings now reflect what you will be spending in five years time?

All of this information brought together will help your financial adviser get a clear understanding of your cashflow situation both now and in the future. It will also help to focus your spending behaviour in the lead up to retirement. A simple analysis of your present and future financial commitments will help you find that magic income figure needed.

In many cases, people are often pleasantly surprised when they do the maths. Clients can be more financially prepared for retirement than they realise. With a clear understanding of where they are now, and where they are heading, they want to make adjustments to their spending to facilitate the transition early. Strategic decisions to clear larger costs may facilitate the opportunity to phase in retirement earlier than expected. When it comes to retirement, having a real grasp of your finances gives you the power to make informed decisions.

To find out more about preparing for retirement and taking your pension income, please reach out and speak to one of our Financial Advisers at Furnley House by calling 0116 269 6311 or email



Past performance is not a reliable indicator of future performance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.