Pensions Planning: The NUMBER

Bravepants

Your car insurance figure seems quite high (£500), considering that you likely have a slightly older car (£150 tax).

Stubod

Well done on such a frugal budget and only spending £100 per month on food!!....not much more than we budget in a week!!....where do you shop? (Aldi/Lidle?)

WannabeEdouard

Bravepants said:

Your car insurance figure seems quite high (£500), considering that you likely have a slightly older car (£150 tax).

A lot of low emmision new cars will be in that tax band range and Insurance will be relatively high.

DairyQueen

VoucherMan said:

Broadband    £282
Gas/Electric    £600
Water rates    £283
Council Tax    £1,164
House insurance    £200
Boiler Service    £120
Dentist    £200
TV licence    £155
Food    £1,200
Car insurance?    £500
Car Tax?    £150
Car Service ?    £500
Petrol    £600
car replace    £750
new boiler    £180
Leisure/Emergency    £2,400

I too would separate leisure and emergency. I would also include house maintenance and goods replacement as a category. A new boiler is just one of the many items that you will need to replace throughout decades of retirement and all houses require maintenance, including decorating materials. Everything from bed linen to kettle needs replacement from time-to-time. We have budgeted 1% of the house value for annual maintenance.

The emergency fund is best reserved for unexpected costs and needs to be replenished.

Your food budget is exceptionally low - especially if that figure includes things like cleaning materials, toiletries, batteries, lightbulbs and the zillion other bits that are purchased from supermarkets with the weekly shop.

There are many items included in our budget that are missing from your's. I appreciate they may not make up part of your expenses but you may wish to consider:

- Gifts
- Christmas
- Travel/Holidays
- Pets
- Subscriptions 
- Optician (20/20 vision rarely lasts into retirement)
- Logs (woodtburner)
- Tree Surgeon
- Window Cleaner
- Plants and garden materials
- Garden waste disposal (chargeable by our Council)
- Phone - landline/mobile
- Car breakdown cover
- Hairdresser

There are also additional costs associated with ageing. At some point infirmity kicks-in and the usual round of domestic chores isn't manageable. Our the last four years my parents (now early 80s) have gradually upped the bought-in domestic support and we now pay for cleaning and gardening services. DIY is now mostly undertaken by family. Without this support repairs would require payment. Ditto decorating. 

In addition, old age introduces costs such as mobility aids and house adaptations (stair lifts, grab rails, ramps). The Local Authority's ability to pay for this is extremely limited.

Your budget has very little fat and if your personal inflation rate outpaces the official rate your income may not keep up.

If you are able to survive on the budget you propose then I congratulate you.

cobson

VoucherMan said:

I’ve got my number to about £775 a month (£9300pa) . Much lower than most on here, but I enjoy a relatively simple lifestyle, 

If you haven't already, you might like to have a look at the Mr Money Mustache site, as they 'get' frugal living much more than the folks here at MSE:
https://forum.mrmoneymustache.com/uk-tax-discussion/

tigerspill

VoucherMan said:

geoffers4 said:

9.3k is much lower than most figures on here - I admire your frugal approach. I'd be interested in a breakdown of your budget, if you'd be happy sharing this. And in particular how much you've put down for things like:
*replacing broken central heating
*general house maintenance/repairs
*costs of long-term care in later life.

Quite happy to share it. I’d far sooner have someone here tell me now that my figures don’t add up, rather than wait until I see the pensions advisors years down the line & have them tell me. 

Broadband    £282
Gas/Electric    £600
Water rates    £283
Council Tax    £1,164
House insurance    £200
Boiler Service    £120
Dentist    £200
TV licence    £155
Food    £1,200
Car insurance?    £500
Car Tax?    £150
Car Service ?    £500
Petrol    £600
car replace    £750
new boiler    £180
Leisure/Emergency    £2,400

Notepad_Phil said:

Don't forget you'll need to squirrel some money away for those occasional but necessary expenditures such as replacement cars (though you say you might give that up), repairs to the house, new central heating boilers, fridges, cookers, carpets, beds, and all those other things that you might only buy once in a blue moon. Some of these might already be included in your spreadsheets, but if not then better to think about them now and make sure the budget can deal with them.

Generally speaking, most of the examples will be covered by my £200 a month leisure/EF budget.  I already have an ‘emergency fund’ that I add to periodically. The plan is that I can use this for any of the items mentioned, and whenever I have money left at the end of the month, it goes into the EF. I anticipate more going into the EF than coming out overall.

More specifically, I should only need one, maybe two new boilers.  Occasionally I question the state of my boiler when it’s being serviced, and I’m assured it has many years left in it. (I have a good local engineer) Although listed separately, If needs be I can dip into the EF.

Repairs/maintenance are minimal. The EF should cover most stuff. Anything major would hopefully be covered on the insurance.

I don’t do much in the way of replacing bigger stuff. White goods, only when the existing ones break, and aren’t economical to repair. Carpets don’t get much wear. I’ve only just (last year) had the living room & stairs/landing done. I may replace the bedroom carpets, but only once. Other big furniture should, like other items, be funded from the occasionally topped up EF. If I ever replace the bed it will hopefully be with a new one. For the sofa I’m less bothered. I bought a second hand leather one from a charity shop last year, my logic being that there’s no point spending a small fortune on a new one unless I like it. 6 months on & I’m very happy with the second hand one, with no intentions of replacing it with a new model.

Replacement cars are included in budget - £750 a year - A decent 2nd hand car should last about 8 years. I've never sold one yet. Just keep them until it's not worth fixing them.

Hoping that makes enough sense. Trying to mess around with the formatting here I almost lost it.

This is a great site for making sure everything is covered.
https://www.retirementlivingstandards.org.uk/details
There is a link to the detailed spreadsheets near the bottom.  You can take these ant tweak them for personal circumstances.

Mick70

I did a spreadsheet analysing what we may need come retirement 
I had    essential   £23k pa  and  desired £43k pa 

Albermarle

Mick70 said:

I did a spreadsheet analysing what we may need come retirement 
I had    essential   £23k pa  and  desired £43k pa 

I am getting close to thinking about stopping work ( at 61) and although we have various quite significant  pensions and savings , I had never actually worked out what we are spending now each year.( two adults and modest support for two grown up children /young adults ) So I worked it out at the weekend and it is very similar to your top figure . As our retirement income will be in the same ball park once the SP's arrive, and we can cover the gap quite easily, then we will probably just carry on at that approx. expenditure figure. In fact it even might go up a bit initially as the non salary benefits from work will disappear, like a company car, free mobile etc .

What's surprising reading some other posts , is that most people who know me would regard me as being cautious/careful  with money. However compared to some others it seems like I/we are big spenders ! Our food ( & alcohol ) bills seems a bit high, as does 'other/miscellaneous ' so could work on that if necessary .
On the other hand to me one of the big advantages of being financially comfortable is not having to calculate every penny of expenditure , and I would rather work for another couple of years than be bound to a spending spreadsheet.

mgdavid

Mick70 said:

I did a spreadsheet analysing what we may need come retirement 
I had    essential   £23k pa  and  desired £43k pa 

Very realistic numbers and very close to my actuals, having been retired for 5 years now. The plan says I can maintain the 'desired' for another 8 years by which time (age 78) I expect declining health to limit my ability to both travel and drive racing cars. The dd pot will then be empty, leaving me with SP and DB income of £35k pa. Still plenty of room for frugality!

DairyQueen

Albermarle said:

What's surprising reading some other posts , is that most people who know me would regard me as being cautious/careful  with money. However compared to some others it seems like I/we are big spenders ! Our food ( & alcohol ) bills seems a bit high, as does 'other/miscellaneous ' so could work on that if necessary .

Same here.

Although we are currently running two homes in order to facilitate Mr DQ working, and it increases our non-discretionary costs substantially, our discretionary costs are pretty low. Like you, our food & alcohol bill is comparatively high, as are our eating-out costs. Other than that we are still stashing-the-cash in preparation for OH's retirement at the end of this year and then (rubs hands gleefully) we are hoping that all of those years (decades!) of saving will finally pay-off.

One larger property is several thousand cheaper to run than two  x modest homes so our non-discretionary expenses will significantly drop. We were also fairly late to planning retirement in any detail so it came as a surprise when the penny dropped that our pensions will support a much higher income than we realised.

We anticipate that our essential spends will be in the same ballpark as your's and that we will live very comfortably on £37k net (plus travel/holidays). However, we have now calculated that, minus disasters, we are actually online for a net income of around £52k!

I am constantly reworking the spreadsheets as I'm still stunned at that bottom line.