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How much money do you need to retire?

It's hard to know how much money you'll need later in life, but it helps to have a target in mind and a plan to reach it.

By thinking about the type of life you want and when, you can work out how much you'll need to save to give yourself the best chance of making it happen.

The sooner you start, the greater the potential impact on your retirement savings and your standard of living when you retire.

What kind of lifestyle do you want?

Everyone has different ideas of how they want to live when they've finished working and different definitions of financial freedom.

Think about the kind of life you want. For example, how many trips do you see yourself taking a year? Where will you live and in what kind of property? Will you be financially supporting family members?

How much do you need?

There may be a lot of differences between your spending now compared to in retirement, but even getting a rough idea of your future spending will help you to plan for the lifestyle you want.

You may think you need more than you actually do – especially if you’re basing it on your current outgoings, and they are relatively high because you're making the most of the opportunities an Expat lifestyle offers.

Look at your living costs, as these will probably change in later life and will depend on where you plan to retire and the lifestyle you want. People tend to spend less on housing costs and commuting to work, but they may spend more on heating, healthcare and insurance.

For example, in the UK, retired couples living outside of London spent around £30,600 on average in 2021 (excluding housing costs), according to research from the PLSA.

When thinking about how much you’ll need, consider if and where you may qualify for a government retirement savings scheme, such as a state pension.

Retirement planning calculator

Check you're on track to reach your retirement goals.

How much should you put into your retirement savings?

Once you have a rough idea of your future spending, you can think about how much you need to save and what you can do to build up your savings for retirement.

Here's a quick way of calculating how much to save. When you start saving, halve your age and use that number as the percentage of your salary you should aim to save each year.

It would mean at 20, you aim to save 10% of your annual income. If you start when you turn 30, this would rise to 15% and so on.

If you want to retire at your current age, use our living in retirement calculator to estimate how much money you could have, and how long it might last, based on your desired lifestyle. 

You can play around with the results to see what difference it would make if you saved more each month, or worked longer.

If you aren't saving enough, we have some tips on how to take positive steps.

Depending on where you live, a common issue for expats is not being able to pay into a work pension scheme. But you might be entitled to other employee benefits to help build your savings. For example, in the UAE, most expat employees are entitled to end of service benefits when they leave employment.

You may also find you’re unable to pay into a pension scheme in your home country, and you’ll want to avoid creating multiple smaller pension pots in countries around the world.

Longer term investment plans are one option to consider as a different way of saving for retirement.

What savings do you already have?

Don't forget to consider what retirement savings you already have, both in and outside the country you're living in, such as:

  • property
  • any entitlement to government retirement benefits
  • previous employee retirement plans or private retirement accounts
  • any other assets such as savings and investments you've set aside for retirement

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