How much do you need to retire? A practical way to work it out
There is no single number that tells you when you can stop work. The answer comes from what you expect to spend, what income you will have, how long the money has to last and how much investment risk you can live with.
By Vince De Stefano, Head of Financial Services
Updated 26 October 2026
5 min read
Key takeaways
- Start with your expected spending in retirement, split into essential costs and discretionary spending.
- Check your State Pension forecast on GOV.UK. State Pension age began rising from 66 in 2026 and reaches 67 by 2028.
- Plan for a retirement of 30 years or more, with inflation reducing the value of fixed income over that time.
- A cash-flow model tests whether your pensions, savings and property can fund your spending, including in poor market conditions.
Start with spending
Most people's spending changes in retirement rather than simply falling. Commuting and pension contributions stop, and mortgages are often repaid. Travel, hobbies and help for children and grandchildren often increase in the early years, and care costs may arise later.
Split your budget into two parts. Essential spending covers housing, bills, food, insurance and transport. Discretionary spending covers holidays, gifts and larger one-off items such as a new car or home improvements. Essential spending is best covered by secure income. Discretionary spending can be met from investments that rise and fall in value.
The Pensions and Lifetime Savings Association publishes Retirement Living Standards that show typical budgets for a minimum, moderate and comfortable retirement. They are a useful cross-check against your own figures.
Your sources of income
- State Pension. Check your forecast and National Insurance record on GOV.UK. Gaps can sometimes be filled with voluntary contributions. State Pension age began rising from 66 in 2026 and reaches 67 by 2028.
- Defined benefit pensions. Final salary or career average pensions pay a set income, usually increasing each year.
- Defined contribution pensions. Personal and workplace pension pots, which you can draw on flexibly from 55, rising to 57 from April 2028. See turning your pension into an income.
- ISAs and other savings, which can be drawn without income tax in the case of ISAs.
- Property, including downsizing or equity release.
Talk to us about your position
Book a no-obligation consultation with the Totus One team.
How long the money must last
A 65-year-old today has a reasonable chance of living into their 90s, and for a couple the chance that one of them does is higher still. Planning to an age such as 95 or 100 is prudent. Over 30 years, inflation at 2.5% a year roughly halves the buying power of a fixed income, so income that does not rise with inflation needs to be treated with care.
A sustainable withdrawal rate
If your investments must provide part of your income, the question is how much you can take each year without running out. Withdrawals that are sustainable in average markets can fail if a sharp fall comes early in retirement, because you are selling investments at low prices to fund spending. Holding one to two years of spending in cash, and varying withdrawals after poor years, reduces that risk.
A cash-flow model brings this together. It projects your income, spending, tax and investment growth year by year, and tests the plan against poor market conditions, higher inflation and a longer life. It also shows how much you could afford to give away, which matters for inheritance tax planning.
Tax in retirement
Pension income above your personal allowance is taxed as income. Normally 25% of a defined contribution pension can be taken tax-free, up to the £268,275 lump sum allowance. Spreading withdrawals across tax years, using ISAs for some of your income and balancing income between a couple can all reduce the tax paid over the whole of retirement. From April 2027 the inheritance tax treatment of pensions also changes. See pensions and inheritance tax.
We build a cash-flow plan that shows when you can stop work and what you can spend, then review it each year as markets, tax rules and your plans change.
Frequently asked questions
How much do I need to retire comfortably in the UK?
It depends on your spending. The PLSA Retirement Living Standards give typical budgets, but your own figures for essential and discretionary spending are the better starting point.
When can I take my State Pension?
State Pension age began rising from 66 in 2026 and reaches 67 by 2028. Check your own date and forecast on GOV.UK.
When can I access my private pension?
From 55 at present, rising to 57 from 6 April 2028, unless your scheme gives you a protected earlier age.
What is a safe withdrawal rate?
There is no single safe rate. It depends on your investments, how long the money must last and how flexible your spending is. A cash-flow model tests the options.
Sources & further reading
The value of investments and the income from them can fall as well as rise, and you may get back less than you invest. Tax treatment depends on your circumstances and may change.
This article is general information, not advice. Tax, financial and legal rules change and their effect depends on your circumstances. Check the current position and take professional advice before acting. Last reviewed 26 October 2026. Totus One Limited (company no. 16855798).
An independent financial planner advising individuals and families on pensions, investments, protection and inheritance.
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