Fiducia Wealth Management
Posted in Financial Planning, Wealth Management on 29.07.21
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For those of us hoping for a life of leisure from the age of 60, the obvious question is “How much do I need to retire at 60?” 

In this article, we discuss exactly what a good pension pot looks like, how it compares to the average pension and how you can boost its value through other means. 

On the surface, retirement planning hasn’t changed all that much over the years. You work, you save and then you retire. But while the mechanics may be the same, today’s savers are facing some challenges that previous generations didn’t have to worry about. 

First of all, life expectancy is longer, which means you’ll need your money to last longer – potentially into your 90s. Bond yields are also much lower than they used to be, which means you can’t buy a few fixed income instruments and earn a double-digit return. Then there is the health crisis due to the coronavirus pandemic.  

This is compounded by the fact that more companies are moving away from defined benefit pensions —which guaranteed you a certain amount of money in your golden years — to defined contribution plans, which are more subject to market fluctuations.  

To retire at 60 is an aspiration that many people share but increasingly fail to plan for. There’s some truth in the adage that ‘failing to plan is planning to fail.’ The 60 years old mark generally allows you to enjoy life whilst you still have your health and fitness, though many now consider 55 years to be a key turning point too. 

Some of the most common reasons for early retirement include holidays of a lifetime, spending more time with family and friends; enjoying your passions and those things you hold dear. Early retirement means you can do the things you’ve always wanted to do, but never had the time for while pursuing your career.  

But how much do you need to retire at 60? 

What is a good pension pot at 60 years and how much income will you receive in retirement? Of course, this all depends on your lifestyle, the choices you make and options you wish to have. But the key thing to remember is that by the time you retire it’s too late to plan. 

Building a retirement pot does not necessarily mean tightening your disposable income, but it does require you to be strategic and consistent in the longer term, the core tenets of financial planning.

Of course, not everybody wants to retire early, but it’s a realistic option for anyone, providing you benefit from sound financial planning advice.

A pension planning review will discuss many things relating to your lifestyle, but the most common questions we are asked include:   

How much income do you need to retire? 

How much money do you need to retire at 60? 

What will be the source of your retirement income? 

What if I already have enough to retire? 

What if I don’t have enough to retire? 

How to retire at 60 without running out of money? 

Annuity vs drawdown – what’s the best option? 

How to create a retirement income plan? 

How can we help you to retire at 60? 

To answer the above questions, the below insights should help. 

Please note, none of the below constitutes financial advice, to ensure your retirement plan is fit for your later life needs, please seek independent financial advice. The earlier you begin planning your retirement, the more likely you are to reach your goals. 

How much income do you need to retire? 

It goes without saying that the answer to this question is entirely dependent on circumstances. 

When calculating your retirement income, start from where you are now. This is your reality and the easiest way to work out how much retirement income you need.

For example, if you receive £3,000 per month and have about £1,000 per month leftover, your expenses are probably around £2,000 per month. Once you know what you spend today, you need to ask yourself how this is likely to change once you are retired. 

Will you be spending less on commuting? 

Will you be spending more on travel and holidays?  

Will you upgrade your car?

It can be useful to create a retirement timeline, showing all the different events, including expenses, to provide an overview of how much you will spend in retirement. 

For those still unsure how much to budget for, the simplest thing to do is to use the ‘70% rule’.  This states that the average retiree requires 70% of their normal working income. So, if you earn £3,000 per month, you’re looking for a retirement income of £2,100 per month.

How much money do you need to retire at 60?

As a general guide, it’s advised that you need 20 – 25 times your retirement expenses. So, if you spend £30,000 per year, you’ll need £600,000 – £750,000 in pensions, investments, and savings. 

However, most people will receive some form of income in retirement, whether that’s a State Pension, final salary pension, rental income or even investments, which you can deduct from what you need to have set aside.

For instance, if you spend 30,000 per year and receive a State Pension of £8,000 and a final salary pension of £2,000, the actual amount you need per year is only £20,000.

If you’re part of the increasing number of people who consider 55 years a key milestone – the first age at which you can access cash from your pension and for many, a start of a transition into semi-retirement – then you might be wondering what is a good pension pot value to aim for. This will naturally depend on your circumstances. 

If you’re looking for a more comfortable retirement of around £25,000 a year, you will need to have built a substantial pension pot by the age of 55 to make this manageable.

The common theme here is that if you want to know how much you need to retire a retirement consultation with a retirement planning specialist is crucial.

What’s your source of retirement income? 

After having established what you will spend in retirement, the next question will be ‘where will the money come from?’ Generally speaking, your income in retirement will come from two places, income and capital:


This is money paid into your bank account every month. It will include savings interest, dividends, State Pension, rental income, and any final salary pensions. If you’re unsure how much State Pension you will receive, you can get an estimate of your State Pension online.

It’s important to consider that different incomes will start at different times. If you’re looking to retire at 60, your State Pension may not be paid until 66 (or 67). Likewise, any final salary pensions may not be payable until 65. 


This is money that you have saved up independently. It will include savings, investments, and pensions. You can withdraw some of your capital each month/year to top up your retirement income. 

This comes with risks. If you withdraw too much, you risk running out of money. If you’re looking to retire at 60, in most cases you can withdraw around 4% of your capital each year.

Income & Capital

Whilst income and capital look different, they serve the same purpose – to provide you with an income in retirement. We advise that you simply compile a list of all your different pots before having a pension consultation to set out a flexible plan.

What is a good pension fund at 60?

When people think about early retirement, they think about pensions. According to the FCA income retirement data, after a lifetime of saving, the average UK pension pot stands at £61,897. 

With current annuity rates, this would buy you an average retirement income of only around £3,000 extra per year from 67 years, which added to the maximum State Pension, makes just over £12,000 a year, just enough for a basic retirement lifestyle.

If you’re concerned about not having a comfortable retirement income, it can pay to take professional advice to improve your pension pot size. Research from the International Longevity centre, shows that, on average, UK savers improve their pension wealth by £30,991 by taking advice.

You will also need to consider any other income you will receive, such as the State Pension or any final salary pensions. Deciding what you want your retirement lifestyle to look like will help you work out how much income you need.

What if I already have enough to retire?

Congratulations! If you already have enough to retire, what are you waiting for?

You’ve worked hard, saved cautiously, and spent modestly. You’ve now got enough income and capital to retire at 60. 

By booking a retirement review now, you’ll identify exactly when you’ll be able to afford to retire and, importantly, not work a day longer than you need.

What if I don’t have enough to retire? 

On the other hand, don’t worry if you haven’t got enough money to retire. There are several ways you can increase your retirement pot.

  • Saving incrementally more each year
  • Delaying your retirement a few years 
  • Reducing your spend a little each year
  • Reviewing your investments for a better return*
  • Taking your final salary pensions early

* By taking more investment risk. There is no guarantee that taking more risk will produce a higher investment return.

How to retire at 60 without running out of money?

The million-dollar question!

If you want to retire at 60 with the peace of mind of never running out of money, you need to purchase an annuity. An annuity provides you with a guaranteed income for life. It’s the only way you can be certain that the income will continue forever. But the problem is, pension annuities provide very little income. You will need a big pension fund to do this. 

Alternatively, you can flexibly drawdown an income from your pension pot. This allows you to take as much or as little money as you want when you want. But it’s not without risk. If you withdraw too much you will deplete your pension.

This is where working with an independent financial adviser can help. Regular reviews of your pension can help make sure you don’t run out of money. 

Annuity vs drawdown – what’s the best option? 

Pension freedom rules introduced in 2015 gave people much greater flexibility and choice over how and when they access their pensions. Flexible options include being able to take up to 25 per cent of your total pension savings tax-free at the age of 55 or over (rising to 57 from 2028), accessing your pension while continuing to work, and using what’s known as “flexi-access drawdown” to take payments from your pension pot as and when you need. 

More and more people are selecting pension drawdown. With annuity rates falling, drawdown can offer better returns over the course of retirement as your money stays invested and can keep up and even exceed inflation. 

However, 92% of people have at least one pension that doesn’t offer flexible access drawdown. [2,547 customer pension savings reviewed between January 2020 – July 2020] 

But what’s the best option? 


An annuity provides a guaranteed income for life. The income you receive either remains the same or can increase over time in line with inflation.

The main benefit of purchasing an annuity is the certainty and security it provides. 

The main drawback of purchasing an annuity is the pitiful income it provides. For example, if you use your £200,000 pension to purchase an annuity at 60, you will receive just £4,848 per year. This assumes that the annuity increases each year and pays your spouse an income if you die.


The other option is to choose income drawdown. This is where you keep your pension pot invested and withdraw money as and when you need it. 

The main benefit of a drawdown pension is that you have complete control and flexibility. You can choose to withdraw as little or as much as you like, whenever you like. 

The main drawback of a drawdown pension is that if you withdraw too much, you will run out of money.  Think of your drawdown pension like your bank account. If you withdraw too much, you will eventually have nothing left. 

What’s the best option? 

As ever, the best option will depend on your circumstances. If you already have enough income to meet your basic needs (food, bills and utilities), you may find that a drawdown pension works well. It can top-up your income, providing extra spending money for holidays and leisure. If you spend your drawdown pension, you’ll still have enough to cover the basics. 

If you don’t have enough income to meet the basics, you may want to purchase an annuity. This way you’ll always know that you have enough to cover the essentials. 

For many people, a hybrid approach works well. As independent financial advisers, we can help you work out what the best option is for your personal circumstances. 

How to create a retirement income plan?

Having established what funds you have available; you will need to create an income plan for your retirement.

Simply put:

Income + Capital = Your Retirement Plan 

To create a comprehensive retirement plan, you will want to use “cash flow modelling “, which will accommodate a realistic degree of flexibility taking into account any withdrawals you make. Ultimately, this will illustrate when you are likely to have enough to retire at 60.

How can we help you retire at 60?

As independent financial advisers, one of our roles is to ensure that you retire in a comfortable and healthy manner. We’re experts in retirement planning with have several awards to our name, including being awarded Gold Standard status in 2019 and Financial Adviser of the Year for the Midlands and South East in 2020.

By working with our advisers, you will learn whether you are on course to retire at 60 (or whatever age you decide) helping you make the right decisions with your money. If you’re not on course, we can advise you on the best options available to achieve your retirement goals. 

We offer a free initial consultation and are happy to answer any questions you have on your biggest financial questions & issues, providing you with independent & impartial advice.

Retirement Consultation 

If you’re looking for a little more help, why not book in for our complimentary, no obligation retirement planning consultation? 

We look at where you are now, where you want to be and then create a retirement plan based on your wants and needs. 

Our advisers will provide you with a high-level retirement summary, looking at: 

✓   Retirement Fund –  how much you need to save for retirement  

✓   Retirement Date – when you can afford to stop working  

✓   Retirement Income – how much you can spend during retirement

Contact our team today and start the conversation, the earlier you start planning the more likely you are to meet your goals.

If you’re looking for more information on what planning your retirement looks like, download our free Planning for Retirement Guide below.

Fiducia Wealth Management
Posted in Financial Planning, Wealth Management on 29.07.21

If you would like to know more about how we as Financial Advisers can help you  with your Pensions and overall Retirement Planning then visit the Retirement Planning section of  our website: Retirement Planning  or send us email at: [email protected]

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

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