The amount a single person needs to retire depends on their desired lifestyle, location, and expected expenses. Here are key guidelines from various sources:
General Savings Benchmarks (U.S.-based)
- Financial advisors often suggest saving around 7.5 to 13.5 times your annual salary by age 65 to retire comfortably, assuming a 4% withdrawal rate to sustain spending for about 30 years
- For example, if you earn $50,000 annually, you might aim to have between $375,000 and $675,000 saved by retirement
- Saving about 15% of your income annually (including employer contributions) is a common recommendation to reach these targets
- By age 40, having about 1.5 to 2.5 times your salary saved is a typical benchmark, increasing with age
Income Replacement Approach
- Another approach is to aim to replace about 80-90% of your pre-retirement income annually through savings and other income sources during retirement
- For example, someone earning between $40,000 and $100,000 should have saved roughly 1.9 times their salary by age 40 to replace about 38% of their income with retirement savings
UK Specific Figures
- According to the UK's Retirement Living Standards, a single person needs:
- £14,400 per year for a minimum retirement lifestyle (covering essentials plus some leisure)
- £31,300 per year for a moderate lifestyle (more financial security and flexibility)
- £43,100 per year for a comfortable lifestyle (including luxuries and regular leisure activities)
- To fund these incomes, you would need a corresponding retirement pot, which depends on your withdrawal strategy and other income sources like the state pension
Australian Context
- The Association of Superannuation Funds of Australia (ASFA) estimates a single person aged 65 needs about AUD 32,915 annually for a modest retirement and AUD 51,630 for a comfortable one.
- Lump sum estimates to fund these lifestyles are approximately AUD 100,000 for modest and AUD 595,000 for comfortable, assuming eligibility for the age pension
Summary
How much you need to retire depends on:
- Your current and expected future income
- Your desired retirement lifestyle (minimum, moderate, comfortable)
- Your country and local cost of living
- Other income sources such as social security or pensions
A practical rule of thumb is to save at least 10-15 times your annual expenses or salary by retirement age. For a single person in the UK, this translates roughly to needing an income between £14,400 and £43,100 annually, with savings adjusted accordingly
. In the U.S., aiming for 7.5 to 13.5 times your salary saved by retirement is common
. Planning with a financial adviser and using retirement calculators tailored to your situation can help refine these estimates.
