What amount of money do I need in order to retire happy? It’s a question that you have probably asked yourself. And now, thanks to research from luxury retirement developer Audley Villages, we might actually have an answer.
The ideal amount of money to retire happy
Audley Villages conducted a study on the happiest cities in the world to establish the correlation between wealth and happy retirement.
They found that people planning to retire in the top 10 happiest cities in the world need to save an average of £219, 063 to retire happy.
To calculate the cost of retirement happiness, they took the happiest cities from the World Happiness Report, and analysed the monthly living costs, average salary and average life expectancy in each to find out the average retirement savings needed.
Helsinki, the capital of Finland, comes out as the happiest place to live out your retirement. It has a high happiness index of 7.8. For a happy retirement in this city, you would need to save up £191,975 by the time you hit 65.
Copenhagen and Geneva come in second and third respectively with a happiness index of 7.6.
The cheapest of the top 10 cities to retire happy in is Wellington, New Zealand. But even there you need to save £156,733 by the time you reach retirement age.
|
|
City |
Average life expectancy |
Average retirement savings |
Annual salary |
Cost of living |
Happiness index |
|
1 |
Helsinki |
81.7 |
£192,327 |
£27,556 |
£959 |
7.8 |
|
2 |
Copenhagen |
80.8 |
£221,915 |
£33,862 |
£1,169 |
7.6 |
|
3 |
Geneva |
83.4 |
£321,554 |
£58,739 |
£1,456 |
7.6 |
|
4 |
Reykjavik |
82.9 |
£235,885 |
£27,205 |
£1,098 |
7.5 |
|
5 |
Oslo |
82.3 |
£237,851 |
£31,150 |
£1,145 |
7.5 |
|
6 |
Amsterdam |
82.1 |
£220,642 |
£31,322 |
£1,075 |
7.4 |
|
7 |
Stockholm |
82.7 |
£211,054 |
£26,892 |
£993 |
7.4 |
|
8 |
Wellington |
82.1 |
£157,029 |
£29,938 |
£765 |
7.3 |
|
9 |
Vienna |
81.4 |
£181,566 |
£23,235 |
£922 |
7.3 |
|
10 |
Luxembourg |
82.1 |
£214,468 |
£40,417 |
£1,045 |
7.2 |
Happy and affordable cities to retire in
When considering not only the happiest but also the most affordable places to retire, Melbourne comes out on top. Among other factors, it has a happiness index of 7.2 and an overall ranking score of 6.6 out of 10. To retire there, the amount of money you need to save is £193,155.
Second on the list is Rio de Janeiro, where you’ll only need of savings of £60,129 to retire. Helsinki, Sydney and Dubai complete the top five.
The only UK city in the list of top happy and affordable places to retire is London. It’s ranked 17th and has an overall score of 6.1.
To facilitate a comfortable retirement in the British capital, you need to have retirement savings of at least £204,817.
|
|
City |
Average life expectancy |
Average retirement savings |
Happiness index |
Annual salary |
Cost of living |
Overall ranking |
|
1 |
Melbourne |
83.3 |
£193,155 |
7.2 |
£33,412 |
£875 |
6.6 |
|
2 |
Rio de Janeiro |
75.7 |
£60,129 |
6.4 |
£3,236 |
£466 |
6.6 |
|
3 |
Helsinki |
81.7 |
£196,011 |
7.8 |
£28,084 |
£974 |
6.5 |
|
4 |
Sydney |
83.3 |
£211,245 |
7.2 |
£36,268 |
£958 |
6.4 |
|
5 |
Dubai |
77.8 |
£136,736 |
6.8 |
£27,123 |
£886 |
6.4 |
|
6 |
Belfast |
82.1 |
£161,308 |
7.1 |
£21,058 |
£783 |
6.4 |
|
7 |
Prague |
79.2 |
£119,534 |
6.9 |
£12,313 |
£699 |
6.4 |
|
8 |
Luxembourg |
82.1 |
£218,555 |
7.2 |
£41,209 |
£1,061 |
6.4 |
|
9 |
Berlin |
81.2 |
£180,013 |
7.1 |
£27,106 |
£922 |
6.3 |
|
10 |
Moscow |
72.4 |
£49,164 |
5.5 |
£8,409 |
£551 |
6.2 |
At the other end of the scale, Hong Kong is ranked as the worst city to retire in. It scores only 5.5 on the happiness index, and you would still require a whopping £260,023 in savings to retire there.
Saving money for retirement
Now that you have an idea of the amount of money you need to retire, how exactly do you make your retirement goals a reality?
Everyone will have a different path, but it all begins with creating a proper savings plan.
It could be as simple as salting away a little amount of money every month (after taking care of your essential expenses) towards your future.
You could even set up an automatic savings plan whereby on payday, a specific amount of money is transferred from your current to your savings account. This requires little effort and is a great way to maintain consistency in your saving habits.
Growing your retirement savings
Once you are in a savings habit, it’s time to ask yourself how you can make your money grow. Here, you have several options.
For example, as part of a long-term savings plan, you can rarely go wrong with the stock market. Investing in stocks has historically helped many investors build wealth.
Using a tax-efficient investment vehicle like a stocks and shares ISA, the stock market could likewise help you turn your savings into a handsome retirement fund. To get started, take a look at our comparison of the best stocks and shares ISAs.
That being said, the stock market has its risks. So as with any other investment, don’t forget to do your research beforehand.
If you are not ready to dip your toes into the stock market, don’t worry. There are other options.
You can still grow your nest egg using a savings account, for example. To find one that’s right for your needs, check out our top picks for the best savings accounts.
Final word
Naturally, the earlier you start saving, the more you’ll have by the time you hit retirement age and the more comfortable your later years are likely to be. So, aim to start as soon as possible.
