Households need more than £740,000 for 25 years of financial independence

Published on

The average UK household would need savings of £743,338 to achieve 25 years of financial independence in retirement, according to new research from mutual insurer Shepherds Friendly.

The study analysed household spending, debt levels and emergency savings requirements, applying assumptions of 2.88% annual inflation and a 5% return on investments to calculate the sums required.

It found that with average annual expenditure of £31,653, rising with inflation, a household would need £1.17 million over 25 years.

Once adjusted for debt and savings growth, the figure comes down to £743,338.

SHARP RISE

The lowest-earning 10% of households would require around £381,000, while those in the top 10% of earners would need more than £1.32 million.

The figures rise sharply for those seeking financial independence for life. Younger adults aged 18–30 would need £1.18 million to fund living costs until age 90, compared with just under £1 million for those in their 50s or early 60s, and about £500,000 for people in their late 60s to early 70s.

Derence Lee, chief finance officer at Shepherds Friendly
Derence Lee, Shepherds Friendly

Derence Lee, chief finance officer at Shepherds Friendly, said: “A common and effective strategy for becoming debt free is to focus on paying off high-interest debts first, as these cost you more over time.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Kennek joins BDLA as trade body expands technology partnerships

Technology firm kennek has joined the Bridging & Development Lenders Association (BDLA) as an...

Clients seek reassurance amid Budget uncertainty

Consumers are placing growing value on financial advice as speculation ahead of the Budget...

Rise in weight loss treatment leads to new underwriting questions

UnderwriteMe has enhanced the question set on its Protection Platform to ensure the use...

Millions of UK adults at risk of financial hardship

Millions of UK adults are at risk of financial hardship in the event of...

The PT is dead. Long live the broker!

Did you know that every time a borrower approaches their bank directly, a mortgage...

Latest publication

Other news

Kennek joins BDLA as trade body expands technology partnerships

Technology firm kennek has joined the Bridging & Development Lenders Association (BDLA) as an...

Clients seek reassurance amid Budget uncertainty

Consumers are placing growing value on financial advice as speculation ahead of the Budget...

Rise in weight loss treatment leads to new underwriting questions

UnderwriteMe has enhanced the question set on its Protection Platform to ensure the use...