People ask us versions of the same question all the time:
-
“Is £1 million enough to retire on?”
-
“What’s my number?”
-
“How much do I actually need so I can stop work and not worry?”
On the surface, it sounds like a maths problem but really, it’s a life question.
Most people don’t care whether the number is £600,000, £1 million or £2 million. They care about what that money means in day-to-day life:
-
Can we stop work at 55 or 60?
-
Can we travel a bit while we’re still fit enough to enjoy it?
-
Can we help the kids with a house deposit?
-
Will we be OK if something goes wrong?
So rather than just saying “£1 million is enough” or “you need more”, let’s look at what that kind of pot can buy in retirement.
Why “a magic number” is misleading
You sometimes see headlines like “You need £1 million to retire comfortably”. Those headlines miss something crucial.
£1 million on its own doesn’t tell you very much. It only becomes meaningful when you know things like:
-
When do you want to slow down or stop work?
-
Are we talking about one person or a couple?
-
How much State Pension will you receive and when?
-
Do you have any guaranteed pensions (old-style final salary or “defined benefit”)?
-
Is your £1 million inside pensions, ISAs, cash, or a mix?
-
Do you want to help children while you’re alive?
-
How important is leaving an inheritance versus spending freely?
Two families could both have £1 million and live totally different retirements because their answers to those questions are different. That’s why we don’t start with “the number”. We start with how you want life to look.
Start with the life, then work back to the money
Here are four very common retirement “styles” we see. You might recognise yourself in one of them or be a blend of two.
A. “Work-optional at 55”
-
You like your work but don’t want to need it forever.
-
You’d like the option to cut down hours, change career, or take a long break in your mid-50s.
-
You want some good holidays while you’re still full of energy.
-
You’re happy to spend a bit more in your 50s and early 60s and then ease back later.
Rough spending target (for a couple): £50,000–£60,000 per year in today’s money.
B. “Comfortable at 60”
-
You are content to work until 60, maybe 62, if the finish line is clear.
-
You want a comfortable but not extravagant lifestyle: holidays, hobbies, treating family, decent cars.
-
You don’t need business-class flights and five-star hotels, but you don’t want to feel restricted either.
Rough spending target (couple): £40,000–£50,000 per year.
C. “Calm and secure”
-
Your top priority is not running out of money.
-
You’d rather have a bigger safety buffer than push the lifestyle to the limit.
-
You enjoy simpler pleasures: family, local trips, hobbies that aren’t hugely expensive.
-
Rough spending target (single or couple): £30,000–£40,000 per year, depending on whether there’s one or two of you.
D. “Later retirement, bigger lifestyle”
-
You’re happy to work into your mid-60s if that lets you spend more later.
-
You like the idea of long-haul travel, regular big trips and being generous with family.
-
You’re willing to take a bit more investment risk and be more flexible with spending.
Rough spending target (couple): £60,000–£80,000 per year.
These are just sketches, but they’re useful. Once we know the shape of the life you want, we can test whether your money can support it. Now let’s bring £1 million into that picture.
How £1 million works in practice
Before we get into scenarios, we need a couple of simple rules of thumb.
Rule 1: Sustainable withdrawal rate
If you have a pot invested in a sensible, diversified portfolio, you can usually take a percentage of it each year as income. Take too much, and you risk running out. Take too little, and you carry risk you don’t need to.
Very broadly:
-
Around 3% a year is usually considered cautious.
-
Around 4% a year is often reasonable if you’re flexible (for example, you can trim spending slightly when markets fall).
On £1 million:
-
3% = £30,000 a year
-
4% = £40,000 a year
That’s before tax and assumes you’re happy to hold your nerve through market ups and downs.
Rule 2: State Pension makes a big difference
For someone with a full record, the State Pension is currently around £11,500 per year (roughly) for one person. For a couple, that’s about £23,000 per year in today’s terms once you’re both at State Pension age. That means you don’t have to get all your retirement income from your £1 million pot. A chunk of it is coming from the State, assuming you have enough qualifying years.
Rule 3: Retirement is not one long, flat line
Most people don’t spend the same amount every year:
-
Early retirement (say 55–70): more active, more travel, more “doing things”.
-
Middle phase: still active, but big trips might slow down.
-
Later years: spending often naturally drops, but care costs can appear.
Good planning allows for these phases, rather than pretending every year is identical.
Scenario 1; £1 million for a couple, retiring at 60
Let’s take a typical couple:
-
They are both 60.
-
Between them, they have £1 million in pensions and ISAs (ignoring the house for now).
-
They both have full State Pension records, starting at 67.
-
They want to spend about £50,000 per year after tax.
Age 60–67 (before State Pension): To get £50,000 a year after tax, they might need to draw roughly £55,000–£60,000 a year from their pots, depending on tax and how the income is structured.
Let’s keep it simple and say £55,000 is drawn. For those first 7 years, the pot is doing most of the work. That’s a withdrawal rate of £55,000 ÷ £1,000,000 = 5.5% per year. On its own, 5.5% would be high for a 30-year retirement. But remember: the State Pension is about to kick in and reduce the pressure on the pot.
Age 67 onwards (after State Pension starts): Once both State Pensions are in payment, that might be roughly £23,000 per year between them. To maintain the same £50,000 after-tax lifestyle, the pot now only needs to contribute something like £30,000–£35,000 a year. If we use £32,000 the withdrawal rate is: £32,000 ÷ £1,000,000 = 3.2% per year
Is that likely to be sustainable? For many couples, yes as long as:
-
The money is invested sensibly (not all in cash, not in one or two risky bets).
-
They accept that in bad market years, they might tighten their belt slightly.
-
They review the plan annually and adjust if needed.
What £1 million is buying here:
-
The ability to retire around 60 instead of pushing on to 67.
-
A comfortable lifestyle in the £40,000–£50,000 a year range.
-
A decent safety buffer if they’re willing to be flexible.
What it’s not buying:
-
£80,000 a year guaranteed for life with no risk and a big inheritance on top.
If that’s the goal, you either need more capital, more risk, more flexibility, or some combination of the three.
Scenario 2; Single person, £1 million, aiming for £40,000 a year
Now let’s look at a single person:
-
Age 60.
-
£1 million in pensions/ISAs.
-
State Pension of about £11,500 from 67.
-
Wants roughly £35,000–£40,000 per year after tax.
Before State Pension (60–67): To get, say, £38,000 after tax, call it £42,000–£45,000 gross from the pot. If we use £43,500 the withdrawal rate is: £43,500 ÷ £1,000,000 = 4.35% in those early years.
After State Pension (67+): The State Pension is now doing roughly £11,500 of the heavy lifting. So, the pot might only need to provide £26,500–£28,500 a year. If we use £27,000 the withdrawal rate is: £27,000 ÷ £1,000,000 = 2.7%.
What £1 million is buying here:
-
A solid, comfortable income for one person.
-
Room for nice holidays, a decent car, and some generosity to family.
-
A good chance of preserving some capital for later life or inheritance.
Scenario 3; Couple with £1 million, but wanting £70,000 a year
This is where expectations and reality can start to part company. Same couple as Scenario 1:
-
Age 60, £1 million between them, full State Pensions from 67.
-
They want to spend £70,000 per year after tax.
Before State Pension (60–67): To get £70,000 after tax, they might need to draw around £80,000 a year. Withdrawal rate: £80,000 ÷ £1,000,000 = 8% per year. That is very likely to be too high for comfort over a full retirement, especially if markets are turbulent early on.
After State Pension (67+): Once both State Pensions are in payment (roughly £23,000 between them), the £1 million pot would need to provide perhaps £55,000–£57,000 a year. If we use £56,000 the withdrawal rate is: £56,000 ÷ £1,000,000 = 5.6%. That is still higher than we’d generally be comfortable with for a long retirement, unless:
-
They’re willing to reduce spending sharply after poor market years, or
-
They are relaxed about the pot potentially being exhausted later in life, or
-
They have other assets (e.g. property) they’re happy to downsize or release equity from.
The key point: For this level of spending, £1 million is probably not enough on its own if the aim is:
-
£70,000 a year
-
No cuts, ever
-
No reliance on downsizing
-
And still leaving a big inheritance
Something must give: the goal, the timescale, the risk level, or the inheritance expectations.
The three big traps people fall into
Numbers are only half the story. Behaviour is the other half. Here are three common traps we see.
1: Lifestyle creep
As pay rises, spending quietly rises with it:
-
Nicer holidays
-
Better cars
-
More eating out
-
Bigger house
By the time people get serious about retirement, their lifestyle has expanded to match their income.
The problem is that retiring on your full “peak career” lifestyle can be very expensive. Something that was easy to afford at 55 while two salaries were coming in might be hard to sustain from a pension pot and the State Pension.
Good planning forces an honest conversation about:
-
What parts of your current lifestyle are genuinely important?
-
What could you dial down in your 60s without feeling deprived?
2: Overreacting to headlines
You will always find articles saying:
-
“You need at least £X to retire”
-
“Stock markets crash, millions wiped off pensions”
-
“Cash is king”
-
Headlines are designed to make you feel something, not to give balanced guidance.
The result can be:
-
People sitting in cash for years, “until things calm down”
-
People assuming they’re doomed because they “only” have £500,000
-
People panicking out of sensible long-term investments
A calm, evidence-based plan usually beats reacting to the news cycle.
3: Focusing only on the first year of retirement
A lot of people think “Can we afford to retire next year?” rather than “Can we afford the next 30 years?”
That can lead to:
-
Retiring too early with too little margin
-
Or, equally sad, working too long because you underestimate what your existing pots can already do
A good plan looks at your whole life: 50s, 60s, 70s, 80s and beyond, including what happens if one of you dies earlier than expected.
So… is £1 million enough?
The honest answer is: £1 million is a big help, but it isn’t magic.
From the scenarios above:
-
For a single person, £1 million can usually support a comfortable £35,000–£40,000 a year lifestyle, assuming sensible investing and some flexibility.
-
For a couple, £1 million plus two State Pensions can often support around £40,000–£50,000 a year, especially if you’re realistic about spending in different phases of retirement.
-
If you’re aiming for £60,000–£80,000 a year with lots of travel and leaving a large inheritance, £1 million on its own is probably not enough for the whole retirement without trade-offs.
The more important question is: “Given the money I do have (or can realistically build), what’s the best life I can design; and what trade-offs am I comfortable with?”
That’s the conversation that changes things.
How we help at PWS
When we sit down with clients at PWS Financial Consulting, we don’t start by asking “What’s your number?” We start with:
-
What does a good life look like for you in your 50s, 60s and 70s?
-
How important is stopping work early versus spending more later?
-
How much do you care about leaving money to children or charities?
-
What are you worried about when you think about retirement?
Then we:
-
Map out your current position:
-
Pensions, ISAs, cash, property, State Pension, business interests; all in one place.
-
-
Build a lifetime cashflow plan
-
We show you, in pictures and numbers, how long your money is likely to last under different assumptions.
-
Test different “what ifs” (Retire at 58 instead of 62, Spend more for the first 10 years, Downsize the house at 70, or not, Help children with a deposit now versus later)
-
-
Create a practical strategy:
-
How to invest each pot
-
How much to draw and from where
-
How to use tax allowances sensibly
-
When to review and adjust
-
-
Review regularly
-
Because life and rules change, and a plan that isn’t revisited soon stops being a plan.
-
What next?
If you’re sitting there thinking “I have no idea whether my £x is enough, too little, or more than I’ll ever need…”
…that’s completely normal. Most people only get clarity when they see their numbers mapped against the life they want.
If you’d like to explore that with us, we can:
-
Take a first look at where you are now.
-
Give you a plain, honest view of what your current pots are likely to buy you.
-
Show you what needs to change (or not) to make your version of retirement feel comfortable rather than uncertain.
You do not have to know your “number” before you talk to a planner.
Working out what £1 million, or £400,000, or £2 million can really do for you is exactly what we’re here for. If you need advice, we’re here to help. Schedule a free, no-obligation chat here. A guide on selecting a financial advisor is also available here.
