Pensions Planning: The NUMBER

Daffodil1234

Hello MarriedWithKids89,  we've done an approx estimation based on how often we think items might need replacing, and what would be the cost, at today's price.  We looked all round the house and wrote a list of what we estimate would need to be replaced / how often.  This gave us some approx amounts per year.

We also made some assumptions about future health care (assuming that the NHS won't be able to provide some things).

So once you've added up the assumptions, you can work out if £5000 / year seems reasonable for you.  Hope that helps.

Phossy

MarriedWithKids89 said:

I can estimate how much we'll need to subsist in retirement (food, utilities, insurances, car running costs, etc) based on current expenditure. I can also work out how much we want to spend on luxuries (holidays, week ends away, day trips, meals out, take aways, etc.). However, it is the unexpected expenses that I am not so certain about, e.g. new windows, new boiler, white goods, new furniture, building/vehicle repairs, etc. These are expenses we will inevitably have - but will have little/no control over when/how much. Therefore, excluding vehicle purchases (single 3yo hatchback that we'll probably keep for at least 5 years), I have budgeted about £5000/year on average to cover these expenses. Does this seem reasonable?   

As we have replaced many things in the last couple of years, I thought I'd put the numbers down (except the roof, but thought I'd add it as it seems to preoccupy many on here). Clearly it will be dependant on your abode, your taste and your mindset (I think mine will be to let everything rot in parallel to my good self..). So, £5000 a year seems a lot to me.

	Cost	Period	Per year
Kitchen	£       15,000	20	£       750
Bathroom	£        8,000	20	£       400
'Avge Roof replacement'	£        5,500	40	£       138
Tumble Drier	£           550	5	£       110
Washing Machine	£           350	5	£         70
Dishwasher	£           350	5	£         70
			£     1,538

MallyGirl

Add in fridge, freezer, boiler, tv and it starts to ramp up

Phossy

Not really - that's why I put the numbers down, because it focusses the mind. You don't have to agree with the numbers (these are real though), but just doing the exercise is illuminating. Reality for us is that we made the big expenditures as a result of COVID and nor spending money on holidays. I would still have spent the money on holidays!

cfw1994

@Phossy puts a fair list there…..I particularly like the comment ethos to “let everything rot in parallel to my good self” - I will remember that when I look at a rotten shed door, etc 🤣

Before I stepped away from the monthly wage, an older good friend of mine suggested getting as many major things as possible done to the home (windows, landscaping, white goods, renovations, etc) and a new car before stopping.  

Solid advice….my last 10 years working included getting a range of those tasks done….nothing major in the 30 months since then 🤞

I’m also sanguine enough to believe one can sometimes overthink these things….be flexible, be prepared to tighten the belt when needed, & enjoy life 🤷‍♂️

kev2009

@cfw1994 When the times come for me to step away (quiet a few years to go yet), I plan to do the same a few years before get any big expenses out the way whilst I'm working so as to not have those when I'm on a pension at least not for a few years at least.  Heard that a long time ago and never forgotten it. 

Things like boilers though could be tricky to estimate given that it looks as though they are trying to move away from traditional gas boilers to heat pumps, hydrogen etc, the costs could be higher and potentially more frequently need replacing and maybe higher servicing/maintenance? Same with cars, seems to be a move to electric/hybrid and they are costly to buy plus I suspect the repair bills will be higher, especially if batteries start to fail or give reduced charge etc means distance will be less so lots of unknowns here.

Kev

michaels

kev2009 said:

@cfw1994 When the times come for me to step away (quiet a few years to go yet), I plan to do the same a few years before get any big expenses out the way whilst I'm working so as to not have those when I'm on a pension at least not for a few years at least.  Heard that a long time ago and never forgotten it. 

Things like boilers though could be tricky to estimate given that it looks as though they are trying to move away from traditional gas boilers to heat pumps, hydrogen etc, the costs could be higher and potentially more frequently need replacing and maybe higher servicing/maintenance? Same with cars, seems to be a move to electric/hybrid and they are costly to buy plus I suspect the repair bills will be higher, especially if batteries start to fail or give reduced charge etc means distance will be less so lots of unknowns here.

Kev

My Nissan leaf has been a money pit - no oil changes of course nor brake pads as braking is mostly done by regen but in 9 years and 85,000 miles as well as tyres I have had to change the wipers once, 2 headlight bulbs and 100 quid on some drop links.  Perhaps it is only after they reach 10 years old that they suddenly cost more to service than ice cars - but I kind of doubt it.

SouthCoastBoy

Imo option if you don't have the means to fund big ticket items in retirement you're most probably not financially ready to retire.

cfw1994

michaels said:

kev2009 said:

@cfw1994 When the times come for me to step away (quiet a few years to go yet), I plan to do the same a few years before get any big expenses out the way whilst I'm working so as to not have those when I'm on a pension at least not for a few years at least.  Heard that a long time ago and never forgotten it. 

Things like boilers though could be tricky to estimate given that it looks as though they are trying to move away from traditional gas boilers to heat pumps, hydrogen etc, the costs could be higher and potentially more frequently need replacing and maybe higher servicing/maintenance? Same with cars, seems to be a move to electric/hybrid and they are costly to buy plus I suspect the repair bills will be higher, especially if batteries start to fail or give reduced charge etc means distance will be less so lots of unknowns here.

Kev

My Nissan leaf has been a money pit - no oil changes of course nor brake pads as braking is mostly done by regen but in 9 years and 85,000 miles as well as tyres I have had to change the wipers once, 2 headlight bulbs and 100 quid on some drop links.  Perhaps it is only after they reach 10 years old that they suddenly cost more to service than ice cars - but I kind of doubt it.

Ha!  Indeed…the running costs for EVs  should be laughably low.  45k miles on our Kona & the brakes are barely touched.  Changed the tyres at around 35k miles…& as you say, some wiper blades.
I do wonder how garages will keep going….but there will always be older cars, and indeed some EVs will also break.

@SCB - define those Big Ticket Items!  

How much do you want to budget?  

£1k pa?  

£5k?  

More?

The one thing we do know is we only have a finite number of years here.  I’ve lost too many friends and colleagues even at my still just sub-60year age 😔
For some, work provides them their raison d’etre, & there is nothing wrong with that!

For me, it was always a way to earn enough to do stuff.  I enjoyed my career & feel I was reasonably good at it, but I never wanted it to define me.   I was lucky to get a good set of friends around the world, & I have caught up with some of them since leaving….I plan to see more,
 

It is a very easy to get sucked into OMY syndrome.  
Those last years at work, for me, were more about figuring out some for at for ‘the next stage of life’.   Then when it felt okay….take that leap!
or….keep working - that is a good choice for many: we are all different 👍

SouthCoastBoy

Big ticket items definition for me are as follows

House deposits for kids 50k each
Enough money to move to a more expensive area if necessary due to be closer to family etc so maybe 100k
Cars renew every 10 years, we buy 3 year old cars as opposed to new cars so 30k every 10 years.
Holidays 5 to 10k per year
Boiler and white goods, carpets, furniture etc. I see as incidentals, as not that expensive in the scheme of things. If I'm scrabbling around to fund a 2.5k boiler I would say I am in financial trouble.

My definition of financial independence is to have enough money so you don't really have to budget to any great extent and the above are all taken care of.