Other calculations suggest that for an individual to retire at 55 and receive a £20,000 pension for life, they’d need a £700,000 pot, plus a full State Pension. Quite a way away then from the average pension pot of £71,342 held by Brits aged 45-54.
One of the keys to being able to retire at 55 is to give your pension pot as much time as possible to benefit from the effect of compound returns. To put compounding into context: a 30-year-old who starts putting aside £500 a month, increasing with inflation, could build a retirement pot of around £476,000 by the time they’re 55.
SPONSORED FINANCIAL CONTENT. If you push back retirement to age 62, you’ll need 16 times your annual salary saved. If you really want to quit work at 55 and you’re willing to live on 60% of your pre-retirement income, you’ll need 15 times your annual income.
You will need a bigger pension pot to retire at age 55 than you do to retire at age 60 or 65 with the same level of income. That’s because the younger you are when you retire the longer your pension income will need to be paid for, which requires a bigger pension fund.
If you want to retire at age 55, there are a few things you will need to consider that someone who retires later will not have to think about. Below I have outlined three major things to consider if you are serious about planning for an early retirement; longevity, health care costs, and your time.
Since you’re trying to figure out how much do I need to retire at 55, you can count on your retirement years to be much longer with more years where the returns could end up being below average, which will cause you to have to dip into your investment principal and therefore reduce stock market earnings once the market swings back up.
Here’s a simple rule of thumb for calculating how much money you need to retire: at least 1x your salary at 30, 3x at 40, 6x at 50, 8x at 60, and 10x at 67.
How Much Income Will You Need In Retirement? (Spouse) Current gross income: $ Years until …
Author: Alice Foster
Once you reach state retirement age, currently 65 for men and 63 for women, the government will provide a sizable chunk of your post-retirement money. The state pension is currently £251.90 per week for a couple (if you qualify for it before 6 April 2016). Find out more: Your state pension and benefits.
Yearly Retirement Income. On average, people expect to need about 65 to 70 percent of their current yearly salary in retirement. A 25-year-old making $60,000 annually wishing to retire at 55 would need $1,484,980 in retirement savings by the time he retires.
A retirement calculator can help you see how you are doing so far and what you need to change to make your retirement goals. By setting goals and meeting them, you give yourself the opportunity for a rich and rewarding retirement.