Ask most people approaching retirement whether they have enough to retire and they’ll respond with a shrug, a “maybe” and some silence. It’s one of the biggest gaps in retirement planning, and it’s stopping people from making more confident decisions about living their life well, winding back their workloads or simply knowing when it’s time to stop.

There are two big groups facing this problem: those who have more than enough, but are working long after they need to because they never sat down and did the sums; and those who retire and are too afraid to spend their hard-earned retirement savings, watching their pension pot like a hawk and living a smaller life than they need to.

There’s a really simple way to work out how much you need for retirement, and yet nobody explains it simply, because their job is to deliver complex advice. Mine isn’t. So let me teach you how I build a back-of-the-envelope retirement number.

Bear in mind, my goal here isn’t to plan your retirement in detail — it’s to give you enough confidence to explore it in more detail yourself. And let’s face it — 30 seconds with a pen and an envelope might just get you closer to thinking about your retirement than one of those boring calculators you’ve been meaning to use for the past ten years but will never do.

The back-of-the-envelope number

Work out how many years sit between the day you plan to stop working, and your 100th birthday. I’m serious. This isn’t a bet that you will personally reach triple figures, it’s insurance. If you plan for a shorter life and you’re wrong, you can run out of money in your eighties with nothing left to fix it — and that’s everyone’s greatest fear. If you plan to 100 and you simply die with a little left over, then you’ve made a rounding error your kids will love you for. Say you plan to retire at 63, minus that from 100 and you’re starting with 37.

Next, work out what you want to spend every year in your healthy years — the years when you’re healthy, active and really enjoying life. That’s the number that matters the most, not a discounted or scaled-back vision of retirement. It also builds in a healthy buffer for the slower years later in life, that can later be used to subsidise healthcare and care rather than holidays.

This number will be £100,000 a year for some including tax, and for others it’ll be £30,000. It’s not for me or you to judge the number. Just choose one. Make sure it will cover your cost of living, your discretionary spending each month, the holidays, cars and renovations. And then make sure you’ve considered budgeting for the gifts you want to be giving, the weddings you might have to subsidise and the help you want to offer your kids. All needs to be boiled into that annual number — even if it happens in lumps.

Now let’s work this out in two chunks: the years after you’re eligible for the state pension, and the period before it. And let’s start with the years after because it’s the easier of the two. Subtract your state pension, currently £12,547 a year in 2026/27 if you have a full national insurance record, from your annual number, because that’s guaranteed income you don’t need to fund yourself. Multiply what’s left by however many years sit between your state pension age and 100. That’s your first chunk. If you think I’m being overly optimistic pushing you to 100, reduce the number of years to a life expectancy you’re willing to bet on.

Next, we work out the trickier parcel: the years before your state pension eligibility kicks in. State pension age is 67 for most people in their fifties today, rising from 66 between 2026 and 2028, with another move pencilled in towards 68 in the 2040s — but that’s still subject to a government review.

So, for the person who’s 63 today, their state pension won’t land until they are 67. Chunk one is worked out on 33 years, from 67 to 100. They need £40,000 for their epic life. They subtract £12,547 annually and find they need £27,453 a year for those years. Multiply that by 33 years to get a round number of £905,000. Chunk two, the gap years from 63 to 67 will be four years, at £40,000 a year, or £160,000. Add the two together and they land at just over £1.06 million, or call it just over a million pounds.

A few careful improvements can make the number more honest.

If you’re part of a couple, you can run the numbers together, because retirement is a shared expense. Just make sure you do the maths based on the younger person’s age because, overall, the core cost of living expenses needs to last through both of your lives, not just your own. And a life shared is ultimately, quite a bit cheaper, with one set of utility, insurance and housing bills between two across a lifetime.

If you’re still earning anything in retirement, or you have a defined benefit or final salary pension, net that off your annual income requirement before you run the annual number into the sum, because any guaranteed income can dramatically reduce the lump sum you need sitting there to fund your life.

And then remember that if £40,000 needs to be your spending power, you need to work out how much of that will disappear in taxes or how much you need on top.

Now cross-check it

This is a back-of-envelope sum, and while it’s a fast way to get a number that could be somewhat useful, it’s certainly not accurate enough to make big life-changing decisions with. So before you do make plans using this figure, cross-check it.

First, build a proper cost-of-living budget for the retirement you are planning for, not the life you have now. Decide where you want to be living, and what housing will cost you once you’ve cleared your mortgage or downsized. Include travel, hobbies and doing things with your family, because they matter.

Then, check your number against the well-known 4 per cent rule, which says you can draw down about 4 per cent of an income-generating portfolio invested in growth assets (not sitting in bonds or cash), with a strong chance it will last for 30 years. On our £27,453, the 4 per cent rule points to needing about £686,000 for 30 years. That’s not the full 37 years we are calculating for above, though, and it doesn’t account for the gap years before state pension age arrives.

Neither number is gospel, but used together you can get a healthy view of how much really is enough.

Finally — think about the point of the exercise. It only works if you do it while you still have choices. Run the numbers early enough and you can adjust your trajectory by saving more, or relax because you’re already at the number.

And consider the real reason I want you to do this. Only about a third of people in the UK (and Australia) retire by choice right now. The rest wait too long and end up pushed out by ill health, redundancy or caring for a loved one.

With this number in hand, that flips. You’re now equipped with the information to design your own exit, with less fear, and more confidence. And, if you want a second opinion, once you’ve done the back-of-envelope sums, go ahead and run it through one of those boring calculators your pension fund offers you, to give it a cross-check. And then get on with planning your epic retirement.

Bec Wilson is Times Money’s retirement columnist and the author of How to Have an Epic Retirement