Pensions Planning: The NUMBER

pensionpawn

expectingtofly said:

This has been a fantastically useful thread, so I thought I would update with our experiences :

As a couple, we have now not worked since around the end of 2020.   
We had a pretty good idea of what our NUMBER was before we stopped, as we had always recorded all our expenditure in Microsoft Money (we had detailed expenditure records going back to 1999!) and always operated our financial affairs completely jointly.
Our aim was to continue the same lifestyle we had while we were working once we had stopped (without the worky bit!).  We don't have a lavish lifestyle,  but we like not having to worry about money. 
We have found that always recording what we spend and having all our finances in joint accounts means that we naturally live within our means and helps us to plan.   My personal experience is that recording what you spend takes less time than you would think and for us it means we can spend less time worrying about it!

Having now lived the retirement life for almost  2 years and we are now pretty sure what our current NUMBER is, it's around £37,500 net.  

As well as recording all our finances in Microsoft Money, I have a detailed planning spreadsheet where I record our overall monthly spend and plan where all our money comes from in the future to ensure that we can continue to cover our NUMBER as inflation rises, and that we can afford the odd one off expenditure (house maintenance, car replacement etc).   From there I have a useful graph that shows the monthly rolling annual expenditure compared to the maximum we can spend without blowing our resources.  As you can see it's reasonably consistent (you can also see the impact of inflation!) and we are managing to live within our means.


In case it is useful to anyone, this is our current categorised spending for the last 12 months so you can see how our NUMBER has currently broken down.



Hope that is of some use to other's plans.

I'm having difficulty balancing "don't have a lavish lifestyle" with £37k retirement income! The median UK household income in the UK in 2021 was £28K (ONS).

mat1964

My number is currently around £35k.  My partner has no pension provision and has retired so it's down to me.  I'm just about there at the moment with a small DB, 2 DC pots and we will have 2 full SPs.  I quit my full time job end May and am with the same employer on a zero hours contract.  Hope to retire fully in 2 years when 60 but we will see.

hugheskevi

pensionpawn said:

I'm having difficulty balancing "don't have a lavish lifestyle" with £37k retirement income! The median UK household income in the UK in 2021 was £28K (ONS).

Deducting the £2,387.15 of (unspecified) taxes from the gross figure leaves net income of £34,688.52.

The Pensioner Income Series shows that pensioner couples under 75 have a median net income of almost £30,000. However, that was prior to the recent inflation, so adjusting by 11.64% based on CPI growth since October 2020 (as Pensioner Income Series figures are from 2020/21) gives £33,500

Take into account a bit of regional variation, and a net income of £34,688.52 for a retired couple looks fairly typical. The days of the average pensioner household being poor are long gone.

pensionpawn

hugheskevi said:

pensionpawn said:

I'm having difficulty balancing "don't have a lavish lifestyle" with £37k retirement income! The median UK household income in the UK in 2021 was £28K (ONS).

Deducting the £2,387.15 of (unspecified) taxes from the gross figure leaves net income of £34,688.52.

The Pensioner Income Series shows that pensioner couples under 75 have a median net income of almost £30,000. However, that was prior to the recent inflation, so adjusting by 11.64% based on CPI growth since October 2020 (as Pensioner Income Series figures are from 2020/21) gives £33,500

Take into account a bit of regional variation, and a net income of £34,688.52 for a retired couple looks fairly typical. The days of the average pensioner household being poor are long gone.

£37k is their net figure, from the text above their numerical breakdown. The most that my wife and I have ever earned net combined is £47k! The point I was making is that the figure of £37k (net) is considerably more than what most couples are bringing home in the UK, and would probably be considered by those on these average incomes as 'lavish'. This is in no way a criticism of the posters desired level of retirement income. They probably had an even higher combined net salary when working. However I would wager that the majority of those who post on this forum are not on or under the average UK salary.

billy2shots

pensionpawn said:

hugheskevi said:

pensionpawn said:

I'm having difficulty balancing "don't have a lavish lifestyle" with £37k retirement income! The median UK household income in the UK in 2021 was £28K (ONS).

Deducting the £2,387.15 of (unspecified) taxes from the gross figure leaves net income of £34,688.52.

The Pensioner Income Series shows that pensioner couples under 75 have a median net income of almost £30,000. However, that was prior to the recent inflation, so adjusting by 11.64% based on CPI growth since October 2020 (as Pensioner Income Series figures are from 2020/21) gives £33,500

Take into account a bit of regional variation, and a net income of £34,688.52 for a retired couple looks fairly typical. The days of the average pensioner household being poor are long gone.

£37k is their net figure, from the text above their numerical breakdown. The most that my wife and I have ever earned net combined is £47k! The point I was making is that the figure of £37k (net) is considerably more than what most couples are bringing home in the UK, and would probably be considered by those on these average incomes as 'lavish'. This is in no way a criticism of the posters desired level of retirement income. They probably had an even higher combined net salary when working. However I would wager that the majority of those who post on this forum are not on or under the average UK salary.

Again, not being disrespectful to the forum member but I personally would find over £200 a week on food for a couple 'lavish'. Add in £3500 on gifts and it's getting close to the idea of that lavish description in a lot of peoples books. 

SouthCoastBoy

I would see £3000 per mth as relatively lavish. I am planning 2500 a mth and to me that would still be relatively lavish, bit different to my mum who survived on about 800/mth

daveshep26

billy2shots said:

pensionpawn said:

hugheskevi said:

£37k is their net figure, from the text above their numerical breakdown. The most that my wife and I have ever earned net combined is £47k! The point I was making is that the figure of £37k (net) is considerably more than what most couples are bringing home in the UK, and would probably be considered by those on these average incomes as 'lavish'. This is in no way a criticism of the posters desired level of retirement income. They probably had an even higher combined net salary when working. However I would wager that the majority of those who post on this forum are not on or under the average UK salary.

Again, not being disrespectful to the forum member but I personally would find over £200 a week on food for a couple 'lavish'. Add in £3500 on gifts and it's getting close to the idea of that lavish description in a lot of peoples books. 

Key point from this poster (for me) was that they wanted 'to maintain the lifestyle they had while working' - so their objective included being comfortable spending £10k pa on food if they wished [I admit, though, I also had the raised eyebrow moment at that point].  Impression I have is that they just are 'comfortable' spending what they want to, how an individual allocates that 35k-37k pot is really up to them, we all value things differently viewing through our own particular lens.  In the round I believe I can see how it wouldn't be viewed as a "lavish" lifestyle (e.g. they've only got ~2,000 on holidays) - but that's just me, who has a little higher "Number".

AlanP_2

People don't compare themselves to some unknown, statistical average person identified within government statistics, they relate and compare to their known peers.

That may be neighbours, family, friends, work colleagues, acquaintances.

A classic example was that guy on Question Time just before the last election who claimed his £80k salary was "average". It probably was among his peers but certainly wasn't when compared to UK statistical average.

The post /amounts being discussed don't sound lavish to me as our number is higher, with a different spread across categories, to others (perfectly reasonably) it seems lavish.

MallyGirl

daveshep26 said:

Key point from this poster (for me) was that they wanted 'to maintain the lifestyle they had while working' - so their objective included being comfortable spending £10k pa on food if they wished [I admit, though, I also had the raised eyebrow moment at that point].  Impression I have is that they just are 'comfortable' spending what they want to, how an individual allocates that 35k-37k pot is really up to them, we all value things differently viewing through our own particular lens.  In the round I believe I can see how it wouldn't be viewed as a "lavish" lifestyle (e.g. they've only got ~2,000 on holidays) - but that's just me, who has a little higher "Number".

This is the point for us - OH would rather work longer to not have a significant drop in lifestyle once retired. Our numbers are bigger but our salaries are currently some way above the average. Our holiday and entertainment (gigs, eating out, theatre) figures would raise some eyebrows but it is what we love to do. We also have expensive dogs!

Linton

Cus said:

I don't have a number. I save the maximum I am allowed into our pensions, I save into our ISAs, then some for kids, and then spend the rest. I don't really know how to decide what to potentially cut back on to retire. I know I am very unlikely to reach a number that would lead to the same amount as I earn now, but I also know I overspend a lot now and could very easily cut back.  I'm kind of just ignoring it and see how it turns out in a handful of years. Is that a bit rubbish?

Yes it is a bit rubbish.  You are wasting money  now which presumably doesnt make you happy as you know you are overspending.   The result that you will have less to spend than you are used to in retirement which wont make you happy either. 

Better to balance by cutting the overspending now to ensure that you can maintain the same standard of living in retirement.