Understanding Your "Enough Number"

The Most Important Figure in Your Early Retirement Plan

Most people spend years working towards a retirement pot without ever properly calculating what they actually need. Here's how to find your real number — and why it's probably lower than you think.

There's a question that sits at the heart of every early retirement plan. It sounds simple. It isn't. 

How much is enough? 

Not how much would be nice. Not how much would make you feel completely safe from every conceivable scenario. How much is actually enough — to live well, to cover the things that matter, to sustain a genuinely good life without either running out of money or working years longer than you needed to. 

I've spent eighteen months thinking seriously about this question. I've used financial planning tools, run multiple scenarios, stress-tested the assumptions. And what I've found — which surprised me more than almost anything else in this process — is that the number most people carry in their head is significantly higher than the number they actually need. 

Not a little higher. Often dramatically higher. 

Understanding why that gap exists, and how to find your real number, is what this post is about. 

The wrong starting point

Here's how most people approach the question. 

They think about their current income. They think about what they currently spend. They assume that retirement will cost roughly the same — maybe a bit less for the commute, maybe a bit more for holidays. And they arrive at a number that looks and feels enormous. 

Then they compare that number to their pension pot, their savings, their ISA balance. And they conclude — often correctly, given the starting assumption — that they couldn't possibly afford to retire yet. 

The problem isn't the maths. The maths is fine. The problem is the starting point. 

Your current spending is not a reliable guide to what retirement actually costs. Because a large and often invisible portion of what you currently spend exists to support the job — not to support your life. 

Let me be specific about what I mean. 

The cost of working

Think about what your money actually goes on right now. 

The commuting costs. Train tickets, fuel, parking, the coffee grabbed at the station on autopilot because you're half asleep and the day is already beginning whether you like it or not. For a lot of people that's £2,000 to £4,000 a year just to physically get to work and back. 

The work wardrobe. Suits, shirts, shoes, dry cleaning. Things you buy because the role requires them — not because you'd choose to spend money on them otherwise. 

The cost of convenience. The Thursday evening takeaway because you're exhausted and cooking feels impossible. The grocery delivery because you couldn't face the supermarket after a long day. The cleaner you employ because between you and your partner, you simply don't have the energy to manage the house on top of everything else. None of this is wasteful. It's a rational response to a life with too little time in it. But it's spending that the job is generating — and when the job goes, it largely goes with it. 

In my own case, I was working away from home one or two nights a week for five years. Hotels, evening meals, the incidental costs of being away from home — even when most of it was expensed, there were always costs around the edges. That whole chapter of spending closed overnight when I handed in my notice. 

What retired life actually costs in the UK

Rather than guessing, there's a genuinely useful benchmark worth knowing about. 

The Pensions and Lifetime Savings Association — a UK research body — publishes what they call Retirement Living Standards. They model three levels of retirement income: minimum, moderate and comfortable. As a rough guide for 2026, a single person can live what they define as a moderate retirement — comfortable, sociable, with some travel and leisure — for around £30,000 a year. For a couple, that figure rises to around £43,000 between them. 

A comfortable retirement — more holidays, a newer car, greater flexibility — sits higher than that. But perhaps not as much higher as you'd expect. 

Now here's the figure that genuinely stopped me when I first looked at it properly. 

The average UK salary right now is around £35,000. After income tax and National Insurance, that lands in your pocket as approximately £28,700 a year. 

Which means the PLSA's moderate retirement income for a single person — £30,000 — is actually higher than what the average worker takes home from their job. And in retirement, if your income is structured sensibly, you may pay very little tax on it. Possibly none at all. 

The lifestyle most people would consider a comfortable, modest retirement costs less than most people earn — and you keep more of it. 

The mortgage-free multiplier

There's one factor that changes the calculation more dramatically than almost anything else. Whether or not your home is paid off. 

Housing costs — mortgage or rent — are typically the single largest item in a household budget. For people still carrying a mortgage into retirement, the income required to cover the essentials is substantially higher than for those who've paid it off. 

If you're mortgage free — and a meaningful proportion of people approaching early retirement are, or are close to being — your baseline cost of living drops significantly. The gap between what you need and what you have narrows considerably. Your enough number shrinks. 

This is one of the reasons I've always believed that paying off the mortgage is a priority for people planning early retirement — not just for the mathematical reasons, but for the psychological ones. Being mortgage free doesn't just lower your required income. It lowers the anxiety attached to your required income. There's a floor under your life that no market movement can take away. 

The lifestyle creep problem

Here's where it gets particularly relevant for higher earners — and I'll be honest about my own situation here. 

I was earning well for a long time. And like most people who earn well for a long time, my spending quietly expanded to absorb it. Not recklessly. Just — life adjusted to income in the way it tends to do. The nicer car. The easier choices. The things that stopped feeling like luxuries and started feeling like normal. 

Lifestyle creep is the phenomenon where spending rises to meet income, almost invisibly, over time. And the problem it creates for retirement planning is this: if you use your current spending as the baseline for your enough number, you're including all the lifestyle creep — all the spending that reflects your income rather than your genuine needs and preferences. 

Stripping that back — working out what you actually need rather than what you've got used to spending — often reveals a significantly lower number. Which means a significantly earlier potential retirement date. 

The way to find out is uncomfortable but simple. Three months of bank statements. Every line. Categorised honestly. And for each item, a single question: would I still spend this if I wasn't working? 

 Some things stay. Food, utilities, insurance, the things that make life enjoyable and comfortable. Some things go. Commuting, work clothes, the Thursday takeaway driven by exhaustion rather than genuine desire. And some things might actually go up — because you'll have more time. Travel, hobbies, things that genuinely matter to you. 

Most people who do this exercise properly — often for the first time — find their real number is meaningfully lower than the one they'd been assuming. Sometimes dramatically lower. 

The tax advantage nobody mentions

There's one more factor that compounds all of the above — and it's one that most people coming from employment genuinely don't think about until they've stopped working. 

In retirement, if you structure your income thoughtfully, you may pay very little tax. Possibly none at all. 

The personal allowance — the amount you can earn before income tax kicks in — is currently £12,570 a year. ISA withdrawals don't count as income at all. The 25% tax-free cash from your pension doesn't either. So if you're drawing from an ISA in the early years of retirement, with modest taxable pension income alongside it, your effective tax rate can be close to zero. 

For anyone who has spent years as a higher rate taxpayer — watching 40% of a chunk of their salary disappear every month — this shift is genuinely startling. The same gross income in retirement delivers significantly more in your pocket than the same gross income from employment ever did. 

Which means your enough number, already lower than your working-life spending, needs to be set against a net income that goes further than working-life net income. The gap between what you need and what your pot can generate closes further still. 

So what is your enough number?

I can't give you a figure. Anyone who claims they can — without knowing your specific circumstances, your health, your location, your housing situation, your family, your spending habits and your income sources — is oversimplifying. 

But I can give you a framework. 

• Start with three months of real spending data. Not estimated. Real. Categorise it and strip out the work-related costs honestly. 
• Adjust for what changes in retirement — what goes up, what goes down, what disappears entirely. Be realistic rather than optimistic. Build in some margin. 
• Check the PLSA benchmarks as a sense-check. Are you above the moderate figure? The comfortable figure? What does that tell you? 
• Factor in your housing position. Mortgage free, or close to it, is a materially different situation from carrying a large balance into retirement. 
• Think about tax. How much of your required income will be taxable? How much can come from ISAs, tax-free cash, other non-taxable sources? 

And then — crucially — compare that real, grounded figure to what your pension, ISA and savings can actually generate. Not what you assumed you needed. What you actually need. 

For most people who do this exercise honestly, the gap between "what I thought I needed" and "what I actually need" is significant. And that gap is often the difference between feeling unable to consider early retirement and realising it might be closer than you thought. 

A note of honesty

I want to be clear about something before I finish. 

Finding your enough number is genuinely important. But it's not a magic solution. The number being lower than you thought doesn't mean the plan is without risk. Markets go up and down. Rules change. Health changes. Life delivers surprises that no spreadsheet anticipated. 

The enough number is a starting point for a plan — not the end of one. Stress-testing it, building resilience into the structure, understanding what happens if things go differently than expected — all of that still matters. 

And if your number still feels out of reach — if the gap between where you are and where you need to be is genuinely significant — there are options. More time. More contributions. Semi-retirement rather than full retirement. Different sequencing of income sources. We cover all of those across the video series. 

But most people start in the wrong place. They start with a number that's been inflated by working-life assumptions and lifestyle creep, and they never question it. 

Question it. 

You might be closer than you think. 

Tony writes about his personal journey to early retirement at freebefore65.co.uk. He is not a financial adviser. All content reflects his own experience and research and should be taken as a starting point for your own thinking, not as professional advice.