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# How much money do you need to retire in the UK?

Working out how much money you need to retire in the UK is not straightforward as there are many variables to consider. For example, life expectancy, retirement age, marital status, income requirements, investment returns, inflation rates, tax rates, and the State Pension are all issues that you need to think about.

That said, there are certain basic calculations that can be a good starting point in helping you determine how much money youâ€™ll need to retire. With that in mind, hereâ€™s a look at one simple retirement planning calculation that could be helpful, as well as some ballpark figures from industry experts.

## The â€˜multiply by 25â€™ rule

One rule that is often used to help calculate how much money youâ€™ll need to retire is the â€˜multiply by 25â€™ rule. This is fairly simple â€“ you simply multiply your desired annual income in retirement by 25 and youâ€™ll arrive at an approximate figure of how much money you need to save.

For example, if you require an annual household income of Â£26,000 per year in retirement (the amount that Which says a household requires on average to live a comfortable retirement), the rule suggests that a couple would need to save Â£650,000 for retirement.

The problem with this rule, however, is that it doesnâ€™t take into account income tax or State Pension payments so the calculations will need some adjustments. My colleague Rupert Hargreaves recently calculated that, when you factor in full State Pension payouts, a couple would need to save Â£430,820 (Â£215,410 per person) to retire comfortably on a household income of Â£26,000 a year. This figure still ignores income tax though.

## Industry expert views

Industry experts, however, believe that you may require a higher figure than this to live a comfortable retirement.

For example, Royal London calculated last year that individuals in the UK now need at least Â£260,000 to retire without money worries. According to the insurer, that figure is the minimum required to fund a comfortable lifestyle.

Aegon believes the retirement pot needed is even higher. It calculated recently that a person on an average UK salary now needs to build up a pension pot of Â£300,000 to be able to maintain their lifestyle. This figure was based on the assumption that income of Â£18,000 per year on top of State Pension payments is enough to live comfortably.

## The takeaway

Whether the figure required is Â£215,410, Â£260,000, or Â£300,000, the bottom line is that to retire comfortably in the UK, you need to save up a substantial sum of money. Therefore, itâ€™s crucial to start planning early.

This means saving for retirement on a regular basis as early as possible, taking advantage of tax-efficient investment vehicles such as the Self-Invested Personal Pension (SIPP), the Stocks and Shares ISA, and the Lifetime ISA, and of course, investing in assets such as shares and funds that are likely to increase your wealth over time.

Ultimately, the earlier you start planning for retirement, the more chance youâ€™ll have of living a comfortable lifestyle in your later years.