The ideal retirement would cost £650k

9 September 2014

Brits would need more than £650,000 to retire in their ideal manner, according to research.

Over-50s say a retirement of 22 years on average would give them the perfect balance between work and leisure time. They estimate an annual income of £25,875 net of tax would be enough to maintain a comfortable standard of living, a survey by wealth adviser Towry found.

Such an income would require a gross pension fund of some £656,568 (inflation aside).

However, according to the Department for Work and Pensions, some 12.2 million people face retiring on an inadequate income - defined as between half and two-thirds of their working age income depending on the amount they earn.

Indeed, Towry's own research found that just 27% of over-50s workers nearing retirement feel they are in control of their finances, and a further 30% of those aged between 50 and 59 realise they need to consider their future finances more.

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Andy James, head of retirement planning at Towry, said: "While the sheer scale of what is needed to provide a comfortable standard of living during retirement may shock some people, what is clear is that the state pension will only go so far.

"Acting on the assumption of a current 63-year-old man who will start receiving the £144 a week single-tier state pension in 2016 (aged 65) the state would only provide £164,736 over 22 years (ignoring inflation). This would leave £491,832 which needs to be generated from pensions and other savings."

He added: "Those who have planned well for their long-term financial future will be much better placed to choose when they retire, and be confident they have built up savings to last throughout their retirement lifetime."
3 ways to top up your pension:

  • Work longer
  • Increase your contributions to a private pension
  • Make full use of your cash and stocks and shares Isas.

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