How much do I need to retire is an open-ended questions, as it very much depends on the kind of lifestyle you want to enjoy in your retirement. However, Legal and General proudly announced back in October that they had calculated “the exact amount of money that you need for a happy retirement.”
The figures come from a new study and report conducted in association with the Happiness Research Institute, an independent Danish organisation looking at wellbeing, happiness and quality of life.
“The report studied the lives of 3,000 retirees, to explore multiple wellbeing measures of people in later-life such as social connections, health and income to analyse the role money plays in a happy retirement.”
The figure of £222k equates to an income of £1,700 a month, or approx. £20,400 a year (including your full State Pension). The survey showed that retirees with this level of income and above were most likely to be happy in retirement.
However, the downside is that only 38% of UK retirees have a monthly income of £1,700+. In the UK:
“One in five retirees (22%) live on less than £1,000 a month, falling below the Pensions & Lifetime Savings Association’s (PLSA) minimum standard for covering essential costs in later-life (£1,200 a month, £14,400 annually).”
No comparisons
Before you start to compare your own situation to this study, some wise words from Theodore Roosevelt:
“Comparison is the thief of joy.”
Your lifestyle and numbers must be your own. Over numerous retirement planning conversations, I have been asked, “What is the average?” or “Does this seem good in comparison?”
My experience is to confirm that the largest part of retirement spending tends to be on leisure. So, yes, money does make a difference, BUT you may already have enough!
Not just about the money
The report incorporated other factors too.
“The happiest retirees were also more likely to be satisfied with their:
– day-to-day routines (80% versus 28%)
– free time (66% versus 25%)
– relationships with family and friends (70% versus 36%)
– social lives (74% versus 23%).”
This income group were far less likely to experience severe loneliness (4% as opposed to 18%). This is not surprising when 34% of retirees surveyed said that financial constraints meant they had to cut back on their socialising.
The report also suggested that young people starting out in work now would need to contribute almost 10% of their income to get to the 2060 target income of £77,145. Interestingly, those in this age group who rent rather than buy a property could need to contribute double that percentage.
Planning ahead
As Meik Wiking, CEO of the Happiness Research Institute said:
“The study shows that money does indeed matter for happiness. … Being without sufficient resources to make ends meet causes worry and stress and a lower quality of life for people in the UK. That is especially the case for people in retirement. The good news is that there are ways we can improve happiness levels by planning and saving for retirement.”
I couldn’t agree more. To me, retirement planning is precisely about creating a roadmap towards a purposeful life beyond work. A retirement plan can help create a happier retirement AND a happier end to your full-time working life, knowing that you’re on track and have plans in place. You may even have sufficient already to retire early and enjoy more of life.
Start your planning with a single call
For more information, simply book your no-obligation, no-cost 30mins Discovery call with me. We can talk through your unique situations, goals, aspirations and current provisions, so you know where you are and what your options are to plan a great retirement.
