“How much do I need to retire?”
It’s the most common, and most misunderstood, question in wealth planning.
The answer? It depends. And not on the markets, the latest pension rules, or what your neighbour says is needed. It depends on you.
The Formula
There’s a bit of a mathematical way to look at this:
Lifestyle Cost + Inflation + Longevity – What’s Already in Place
=
Your “Enough” Number
Let’s break this down a bit:
Step 1 – Define Your Lifestyle
Your “enough” is not someone else’s. Look at:
- Essential costs: housing, bills, food
- Discretionary costs: travel, dining, hobbies
- Expenses for any dreams you might have: a second home, gifting, philanthropy
Step 2 – Apply the Reality Filters
Consider what is likely to affect your retirement income:
- Inflation: assume more than you’d like
- Longevity: plan for 30+ years
- Returns: be conservative, not optimistic
Step 3 – Factor All Income Sources
Finally, look at all your income sources for retirement:
- State pension
- Private pensions
- ISAs
- Rental income
- Business proceeds
Why People Get it Wrong
Common mistakes are using rules of thumb, ignoring tax, and overestimating returns. The “4% rule” or “multiply by 25” approaches are too crude for complex, high-net-worth situations.
The Hartey Wealth Management Edge
We work with you to build your “Enough Number”, then stress-test it against market dips, inflation spikes, and longevity.
If you want to know your personal “Enough Number”, contact us today to book an appointment with an adviser.
