In this brief guide we are going to answer the question: can I retire on £250 000? This will give you an idea of how much you need to retire.

Can I retire on £250 000?

Yes, you can retire on £250,000 but this will depend on what age you intend to retire, how much you spend each month if you plan to reinvest some of the £250,000 into a cash returning investment such as a buy to let property and what your life expectancy is. 

How much you can retire on is a question many people have but the answer to this question isn’t so simple. You have to consider how much you will get tax free and what income tax charges you may have to pay based on how you withdraw money from your pension pot if your £250,000 retirement funds are kept in a pension pot.

You will also need to consider if your lifestyle in retirement will have changed significantly from when you were working.

Do you still have a mortgage?

Do you have kids below the age of 18?

Will you work part-time and need to commute?

Do you still have any credit facilities which you need to repay?

If you are a non-home owner then you could need more than £250,00 to retire due to the fact that you will need to spend a considerable amount of money on rent each year.

When Which carried out their survey they found that on average mos retirees which they surveyed spent about £27,000 pounds a year in retirement. If they did not invest the £250,000 retirement savings in any way and got no annual returns from it then they will run out of retirement funds in about 8 years.

The which survey found that £27,000 a year was for a basic life where expenses were covered and no real luxuries were indulged in. 

If you were to indulge in holidays, buying new cars every few years etc then you may need closer to £40,000 a year to live off in retirement. In this case, £250,000 may not be sufficient to retire off except it was producing annualised returns which were sufficient enough to grow your retirement funds and still sustain your annual expenses.

If you plan to invest your £250,000 then you may want to use a pension calculator to gain an insight into how much

Research carried out by Aegon shows that people should be targetting 66% of their working-age income as their annual retirement spending.

How to build a £250,000 pension pot

If you want to retire on £250,000 you will need to build a £250,000 pension pot. The first thing you should look to do is increase your contributions into your pension pot. At the very minimum, you should be putting 15% of your income away into your pension pot.

If you are struggling to build a sizeable pension then looking at the fees your current pension manager is charging you may be able to save thousands of pounds in management fees etc.

In this brief guide we answered the question: can I retire on £250 000.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.