How much to retire on £40,000 a year in the UK?
To fund £40,000/year of after-tax spending from investments alone, the rule-of-thumb portfolio is about £1.08M (a 4% withdrawal rate, adjusted for UK tax). That's the portfolio-only figure — it ignores pensions. In practice the State Pension (~£12,548/year from 67) and any workplace or DB pension cover a big slice of £40k later in life, so the pot you personally need to build is usually lower than the headline number.
The portfolio-only number vs the real number
£1.08M assumes your investments fund the whole £40,000 forever, with no pension help. Counting the State Pension (~£12,548) and any DB pension can reduce the pot required substantially — because once those income streams start, your investments only need to top up the difference. The 25× rule of thumb is a useful cross-check, but it's deliberately conservative.
Tax and wrappers change the figure
Where the money sits matters. £40k drawn from a tax-free ISA needs a smaller pot than £40k drawn from a taxable account (Capital Gains Tax) or a pension (income tax after the 25% tax-free element). A realistic plan sequences ISA, taxable and pension withdrawals to keep the tax bill — and therefore the pot required — as low as possible.
Model your own numbers — ISA/SIPP split, the bridge to 57, Monte Carlo and more.
Open the free UK FIRE calculator →Frequently asked questions
How much do I need to retire on £40,000 a year in the UK?
About £1.08M as a portfolio-only target on a 4% withdrawal rate. Counting your State Pension (~£12,548/year) and any DB pension typically lowers the pot you personally need.
Is £40,000 a year a good retirement income in the UK?
It is above the "moderate" retirement living standard for a single person and around comfortable for many households, before housing costs. It comfortably exceeds the full State Pension, so most of it comes from your own savings until 67.
Does the 25× rule work for £40k?
As a starting point, yes — 25× £40,000 is £1,000,000, and once UK tax on withdrawals is added the figure is a little higher. But it ignores pensions, so treat it as a conservative benchmark, not the final answer.
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InflectionFI is an educational planning tool, not financial or tax advice. Figures are estimates based on your inputs and stated assumptions. Verify your situation with a qualified adviser.