Article How much do you need to retire at 50?

For many people, retirement seems a long way away, and it might not be something you’ve thought much about. But ​​​​for others, retiring early could be a dream you’re actively working towards. The average retirement age is 65.4 years for men, and 64.3 for women – but what if you wanted to retire at 50?¹​ If you can afford it, retiring while you're still fairly young, could allow you to enjoy life free of work before facing the challenges of ageing.

It can be tricky to work out how much money you need to save before taking the leap into early retirement. The right amount is different for everyone and working it out requires some careful planning.

5 questions to find out how much you need to retire at 50

1. What retirement lifestyle do I want?
2. How much will I need to live on each year?
3. How much can I depend on my pension?
4. Can you delay taking pension payments?
5. How many years do you expect to be retired?

Start by answering these five questions to determine how much you’ll need to save to retire at 50.

1. What retirement lifestyle do I want?

Before we start talking about finances, thinking about what you’d like to do during your retirement can help clarify how much money you’ll need. Retiring at 50 might seem like an exciting prospect as you don’t need to work. But, you might end up with more time on your hands than you first anticipated. 

We all have different retirement lifestyles in mind. You might be comfortable living a bit more frugally, want to travel – or maybe you want to use your early retirement income to start a personal project. You might even find that you don’t want to stop working completely. In this case, you could turn a project into starting your own business. Striving towards what you want, and putting savings away to try to achieve this, is a good starting point and motivator.

2. How much will I need to live on each year?

It will depend on the retirement lifestyle you want to live – but to help provide some direction, you could try the ‘50-70 rule’. It suggests that you should aim for a total retirement savings pot, that gives you an annual income of between 50-70% of your pre-retirement income.² So, if you’re used to living on £40,000 a year, you might need a retirement income of roughly £20,000 to £28,000.

However, the rule doesn’t work for everyone. For example, if you expect to be paying rent and have a car payment, you’ll likely need more income than someone who has a mortgage paid off and doesn’t drive. So, in addition to using the 50-70 rule as a guide, take time to calculate your basic annual expenses. Also, be sure to include any special things you want to buy or do during retirement, such as travel or golf.

3. How much can I depend on my pension?

You can’t take pension benefits before the normal minimum pension age (NMPA) of 55 (rising to age 57 in 2028) unless you have a protected pension age or are in ill health.

If you plan to retire before the NMPA, you'll need to determine where you'll get income from during that period. This is important to remember when you’re starting your savings journey. Say you’re in your 20s or early 30s – you’ll need to plan for the fact that the NMPA to access your private pension may change again in the future. So, you’ll need to save enough to live on beyond the age of 57.

Depending on your personal situation – you’ll probably need significant savings or income from other investments to tide you over until you can access your pension. 

Workplace pensions

Your workplace pension differs slightly from any private pensions you may have. Under auto-enrolment your employer may be making contributions to your workplace pension too. Generally, employees need to put in at least 5% of their annual salary and your employer must add a minimum of 3% on top of that – but every company will have their own contribution structure for their workplace pension so make sure to check this out.³ Try to make the most of your employer’s contributions to help you pay more into your retirement savings each month.

Our Financial Wellbeing Index can help you work out how much you should be contributing to your pension – check out the long-term savings section.

State pension

Remember to include your State Pension entitlement. You can’t access your State Pension until you’re 66. This is rising to 67 between 2026 and 2028 and is expected to rise again to 68 between 2044 and 2046 (potentially even sooner). This is another income to factor into your financial planning for when you reach this age.

For more information about the State Pension fits into this, read our State Pension article.

4. Can you delay taking pension payments?

Even though you can withdraw funds from your pension at the NMPA, delaying taking your pension could give your pension pot more time to potentially grow. For example, you could work to save enough money to avoid taking pension payments until age 65 or later. By living off savings for a period of time, you’d be able to preserve your pension pot and make sure that it’ll last longer in retirement. But remember, the value of your pension pot can fall as well as rise and isn’t guaranteed. You might get back less than you’ve paid in.

As mentioned, by doing this, you‘ll need to have more money in other savings or investments that you can draw from until you choose to access your pension.

5. How many years do you expect to be retired?

There are no guarantees for how long any of us will live, but for retirement planning purposes, you should try to make an informed guess. Find out the average life expectancy for a person of your gender in your geographic region. Also, consider your family history. If you expect to live to the age of 85 and you plan to retire at 50, you’ll need to save enough to support yourself for 35 years in retirement.

When you have a general idea of how many years you might expect to live, you can calculate how many years you’ll need to plan for in retirement. There are plenty of online retirement calculators available, including the government’s from their MoneyHelper website.

Your next steps to retire at 50

Once you’ve answered these five questions, you’ll likely be able to develop a better idea for how much you’ll need to retire at 50 – or any age. Even if retirement seems a long way off, it’s never too early to start thinking and saving towards it. The earlier you start the better.  

The key is to understand that your retirement will look different from someone else’s and the amount you need to save will depend on your specific situation and expectations.

Remember, financial advisers are highly qualified professionals who can help coach you towards achieving your financial goals. If you don’t already have a financial adviser, you can find one near you by visiting MoneyHelper. There’s likely to be a cost for this advice.