How much do I need to retire at 60?

Working out how much you need to retire at 60 is different, depending on your goals and expectations. Some people try to answer this question with catch-all rules, but the best way to work out if YOU can retire at 60 is to build your budget, assess your income and work out how to plug the gaps. 

What is the average UK pension pot at 60?

According to the most recent pension wealth data published by the Office for National Statistics, median pension wealth in unaccessed pensions among 55-64 year olds was £96,500.

How much will you spend each year in retirement?

Build a retirement budget

A retirement budget is a good place to start. Look at your current spending and think about what costs will carry over into retirement. 

Consider splitting this into categories:

• Essential costs: Housing, bills, food, transport, and basic leisure.
• Luxuries: Holidays, hobbies, gifts, and home renovations.
• Irregular costs: New cars, home repairs, and care costs.

With this, you can build a picture of your monthly and annual spending. 

Spending at a glance

Building a retirement budget can be time-consuming. If you don’t have time, the Retirement Living Standards offer quick insight into retirement spending for different lifestyles.

Minimum covers your basic needs, with a little extra factored in for fun, such as a week-long UK holiday.

Moderate offers more flexibility, with an annual holiday abroad and car purchases considered.

Comfortable is the most expensive, with a £134 weekly food budget, car purchases every five years and four holidays per year taken into account.

In addition, each assumes a retiree owns their own home and is not paying a mortgage.

These amounts might seem like a lot, but remember the state pension (full state pension is £11,973 per year in 2025/26) and other savings or benefits may contribute towards retirement income.

‍The Retirement Living Standards can work as a rough guide, but they do not take your personal circumstances or inflation into account.

How much income do you need to retire at 60?

What income will you receive at 60?

Now that you have established your spending, it’s time to look at your capital and income options. Think of sources like: 

• Workplace pensions: Most workplace pension schemes can be accessed from age 55 (57 from 2028). Pension providers will supply you with statements and projections. Your workplace pension may be a defined benefit (DB) or defined contribution (DC).
• Personal pensions: You can use personal pensions, like Freetrade’s SIPP, to bolster retirement income. You can currently begin withdrawals from age 55 (57 from 2028).
• Savings: You can withdraw from savings and investment accounts, like stocks and shares ISAs, to provide additional funds in retirement.
• Part-time work: You may choose to continue working a reduced number of hours to top up your income. 

Passive income: You may have passive income sources, like rental properties or dividend stocks.

What income can you access later in retirement?

Some sources of income or capital might come later. You can factor these into your thinking, but bear in mind you may need to bridge the gap between your retirement and these additional sources of income becoming available.

• State pension: Depending on when you were born, you will start receiving your state pension between 66 and 68. Check your state pension age if you are not sure. 
• Downsizing: If you own your home, you might choose to move to a cheaper property to reduce housing costs or to free up capital. 
• Inheritances: You may be in line to inherit money or assets, though you should be wary of making these a formal part of your plan.

‍Remember: Pension and state pension income is taxable. This must be taken into account when calculating your income in retirement. However, you can usually take a 25% lump sum of your pension pot tax-free.

How much do you need to retire at 60?

Now that you have worked out your spending and your income sources, you can determine how much you need to retire at 60. 

Take your expected annual spending and minus the amount you will receive from reliable sources of income, such as the state pension or defined benefit pension schemes. 

The number you are left with is the amount your DC and personal pension must cover each year.

Read Freetrade’s guide to different types of pensions if you are not sure what kind of retirement savings you have.

‍Remember: Some sources of income may not kick in at age 60, and so you may need to take a higher level of pension income when you first retire to bridge the gap.

How to make sure your pension pot lasts

Using a safe withdrawal rate is crucial to ensuring you do not take too much from your pension pot too quickly. 

Most analysis suggests withdrawing no more than 3-4% of the initial pot size each year (adjusting for inflation each year) for a 30-year retirement. Some even suggest a 3.1% rate is most appropriate in the UK.

The lower the percentage you use, the longer your pot will last. So you might want to consider using a lower % withdrawal rate if you anticipate being retired for over 30 years, or you just want more financial flexibility.

Make sure you can cover the remaining annual expenditure using a safe withdrawal rate.

So if you have a pot of £600,000 and want to use a withdrawal rate of 4%, your income would be £24,000 before tax and fees.

How to boost your retirement income

If you are some way from what you need to retire, the best time to start fixing things is today. 

• Increase your pension contributions and maximise employer contributions. 
• Improve how your pension is invested. Some pensions, like Freetrade’s free SIPP, allow you to choose your own investments if you want more control.
• Check your National Insurance record and fill in any gaps to improve your state pension.

For more ideas, read our guide to tackling pension underperformance.

Retiring at 60 - FAQs

Can I retire at 60 with 400k?

Depending on your circumstances, it may be possible to retire at 60 with £400,000. If using the 4% rule covered in this guide, this size pot would give you an initial annual pension income of £16,000 before tax and fees.

How long will my pension last if I retire at 60?

The amount of time your pension pot lasts depends on how much you withdraw, as well as market performance if it remains invested. The 4% rule aims to allow for a 30-year retirement.

What happens if I retire before state pension age?

If you retire before state pension age, you will need to rely on other sources of income, such as pension pots and savings, until you reach your state pension age. 

How much should I have saved by 60?

There is no hard and fast rule for how much you need to have saved by age 60. Some sources might say you need 8x your salary or 6x your salary. In reality, taking the time to work out your own needs will give you an answer closer to the truth.