The question of how much you need to retire is simultaneously simple and deeply personal. Simple because there's a well-tested formula. Personal because your retirement number depends on when you want to stop working, how much you plan to spend, and how long you might live.
This guide walks through the most widely used frameworks, tests them against real scenarios, and helps you calculate your own retirement target.
You can safely withdraw 4% of your retirement portfolio each year without running out of money over a 30-year retirement.
The 4% rule comes from the Trinity Study (1998), which analysed historical market data and found that a portfolio of 50-75% stocks and 25-50% bonds could sustain a 4% annual withdrawal for 30 years with a high probability of success (95%+ historically).
Directly derived from the 4% rule: to retire comfortably, you need a portfolio worth 25 times your expected annual spending.
| Annual Spending | Portfolio Target (25×) | Monthly Withdrawal |
|---|---|---|
| £20,000 | £500,000 | £1,667 |
| £30,000 | £750,000 | £2,500 |
| £40,000 | £1,000,000 | £3,333 |
| £50,000 | £1,250,000 | £4,167 |
| £60,000 | £1,500,000 | £5,000 |
Before you panic at the numbers above, remember the UK State Pension reduces how much your private pot needs to cover:
If you're targeting £30,000/year in retirement, the State Pension covers £11,500 — so your private pot only needs to produce the remaining £18,500. At 4%, that means a private portfolio of £462,500, not £750,000.
Industry rules of thumb for how much you should have saved at various ages, relative to your salary:
| Age | Target Savings (multiple of annual salary) |
|---|---|
| 30 | 1× |
| 35 | 2× |
| 40 | 3× |
| 45 | 4× |
| 50 | 6× |
| 55 | 7× |
| 60 | 8× |
| 67 (State Pension age) | 10× |
So on a £45,000 salary at age 40, the target is £135,000 in pensions and investments. These are guidelines, not hard rules.
If you're starting from zero at age 30 and targeting £750,000 by 67 (37 years), assuming 7% average annual growth:
| Starting Age | Monthly Saving Required (7% return) |
|---|---|
| 25 | ~£430/month |
| 30 | ~£640/month |
| 35 | ~£970/month |
| 40 | ~£1,500/month |
| 45 | ~£2,400/month |
The doubling in required savings between 30 and 40 illustrates the brutal cost of delay. Starting 10 years earlier nearly halves what you need to save each month.
The 4% rule was developed with US market data and a 30-year horizon. Consider these caveats:
FIRE (Financial Independence, Retire Early) takes the 4% rule to its logical extreme — saving aggressively (often 50-70% of income) to retire decades early. Key variants:
Enter your current savings, age, target retirement age, and expected spending to see your personalised retirement savings plan and projected pot size.
Plan My Retirement →At the 4% rule, £500,000 generates £20,000/year. Combined with the full State Pension (~£11,500), that's ~£31,500/year — enough for a modest but comfortable retirement, especially if your mortgage is paid off. In an expensive city, it may feel tight.
Yes — £1 million at 4% generates £40,000/year, plus State Pension brings total income to ~£51,500/year. For most people outside of London with a paid-off home, this is a comfortable retirement. With careful investment management, a £1M portfolio can last well beyond 30 years.
The 4% rule implicitly accounts for inflation by increasing withdrawals annually with inflation. Your portfolio must be invested (not all in cash) to maintain real value. A cash savings account returning 4% with 3% inflation gives you a 1% real return — not enough to sustain retirement.
From age 57 (rising from 55 in 2028). You can take 25% tax-free as a lump sum. The remainder is taxed as income when withdrawn. Taking large amounts at once can push you into higher tax brackets — plan withdrawals carefully.