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How much money do you need in retirement?

When you say goodbye to the 9-to-5, will you be able to afford the lifestyle you want? It’s time to take a closer look at your finances – and if your income needs a boost, equity release could be an option… 

It pays to plan ahead

When the time comes to retire, you want to enjoy a comfortable standard of living. But since we’re all living longer – and state pensions aren’t always enough to live on – achieving a comfortable retirement can be easier said than done.

On average, retired couples need around £18,000 a year to cover all of the household essentials – like food, utilities, transport and housing. This goes up to £26,000 when you include extras like short-haul holidays and leisure activities.*s So it’s well worth taking the time to consider your own financial situation.

Even though some of us won’t need our full salary in retirement – after all, the kids may have left home – it’s still wise to do your sums and make proper plans for later life. Let’s have a look at a few things you should consider.

*Source: How much will you need to retire? Which?

happy couple clinking glasses of wine

How much do you spend now?

First things first – let’s see how much you spend now. An easy way to calculate your current outgoings is to look through bank statements from the last three months.

Go through with them with a fine tooth comb and make a note of things like utilities, food shopping and other regular bills and expenses (including your mortgage if you still have one, and travel costs to get to work). It’s also worth adding up your one-off spends – like your annual holiday, car repairs and Christmas presents.

mature lady watering the garden

Will any of this change when you stop working?

Okay, so once you’ve got a clear picture of how much you spend each month, it’s time to ask yourself whether any of these costs could go down when you stop working.

For example, will you still have a mortgage to pay? If not, this is likely to significantly reduce your outgoings, meaning you’ll have more money to play with each month. But if you still need to pay it off, then be sure to factor this into your finances.

couple looking at moored boats

Could any costs go up?

While some costs could go down when you retire, remember that others could go up. It’s important to be aware of these so you can think about how you’ll cope with them when the time comes.

For some of us, retirement will mean spending more time at home – and so your heating bills could rise. Others will want to use their new-found free time to enjoy hobbies and interests. And if you’ve been used to going on holiday every year, why should you give it up in your later years? After all, you’ve spent your life working hard and this should be your time.

As a rough guide, here are a few examples of how much people aged 65–74 are spending on average:

  • £1,898 per year on holidays
  • £1,903 per year on restaurants and take-aways
  • £125 each year on going to the cinema and museums
  • £617 each year on alcohol and tobacco
  • £1,138 each year on new cars and motorbikes*

*Source: How much will you need to retire? Which?

couple calculating their financial position

Calculate your income

So, you’ve worked out how much you plan to spend. Now it’s time to see how it compares to the income you’ll get from your pension (including your state pension and private pensions if you have any).

Many will find that they don’t have anywhere near as much as you were earning before – and even though you may have been paying in for years, the reality is that many pensions pots aren’t enough to give you a really comfortable lifestyle in retirement.

With this in mind, you might find that there’s a gap between the income from your pension and your outgoings. And if you don’t have enough savings to cover the extra, you’ll need to start thinking about ways to access cash to make sure you do.

If you have money tied up in your home, here’s one possible solution to help you make the most of retirement…

house key next to dollar bills

Equity release could help bridge the gap

If you’re a homeowner aged 55 or over, equity release could just solve your financial worries. You can explore the details in our equity release guide.

Basically, equity release lets you unlock tax-free cash from your home – either as one lump sum or smaller amounts as and when you need them. So, rather than leaving it tied up in bricks and mortar, you’d have access to the money – and you’ll be free to put it to good use during your retirement.

If you still have a mortgage, the money you release will go to pay this off first (as well as any other debt secured on your property) – so you won’t have to worry about that anymore. Anything cash left over after that is yours to spend as you wish – and you could use it towards improving your lifestyle in retirement.

You won’t even have to make any repayments in your lifetime – because the money, including rolled up interest, will simply be repaid when your home is sold. That’s usually when you pass away or move into long-term care.

Use our Equity Release Calculator to see how much money you could unlock from your home.

happy couple talking with an adviser

Get the advice you need

Everyone’s circumstances are different, so bear in mind that equity release isn’t the best solution for everyone.

Just like with all big financial decisions, you should seek independent expert adviser to help you decide what’s right for you. And don’t forget to talk to your family – because equity release will reduce their inheritance and you’ll want them to know where they stand.

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). 

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan, Dignity Funerals Ltd arranges and provides the funeral services, registered office: 4 King Edwards Court, Sutton Coldfield, West Midlands, B73 6AP (registered in England and Wales, No. 00041598). Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services, registered office: 4 King Edwards Court, Sutton Coldfield, West Midlands, B73 6AP (registered in England and Wales, No. 00041598). Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.