I want to retire! How do I work out my retirement income?

If you are looking out of the window at the gloomy February weather and wishing for some sunshine, it’s also quite natural to start thinking about retiring to a nice warm beach somewhere. That’s great but it isn’t just going to happen. You need to plan for it. Specifically, how big a pot do you need to get the retirement income you require?

How much do you need to retire? It turns out, that with a couple of pieces of information you can work it out.

In essence you first of all need to work out how much you need to live on a year. If you haven’t carried out this exercise before then give it a try.  It can be quiet an eye opening task to establish your required retirement income and may even lead to a few discussions with your spouse. I know it did in our household!

But coming up with that number is only half the puzzle. You need to work out how big a pot you’ll need in order to generate that retirement income.

A regularly used rule of thumb is that you can draw down 4% of you pot in the first year and then adjust that for inflation in subsequent years. Assuming the pot is invested in bonds and equities, you shouldn’t run out of money over a 30 year period. You can read more about that approach here.

But, it’s only a guideline. You can get a lot more specific by actually working it out.

Please watch this short video to find out more about your potential retirement income…..

You can find out more about the FIRE Revolution approach to generating retirement income here


Third Friday Ltd are not regulated by the Financial Conduct Authority and the FIRE Revolution training programme is purely educational in nature. Under no circumstances do we provide any financial trading or investment advice. Any examples used are for educational purposes only and should never be construed as advice. We accept no responsibility for any investment losses you may incur. Please consult a financial advisor or other qualified professional if you are in any doubt as to the suitability of the strategies we teach.