Pensions Planning: The NUMBER

beaker141

OldMusicGuy wrote: »

Reading about FIRE and

Hi - Whats FIRE - I feel I'm missing out on a blog somewhere having already read MMM and the escape artist ?

JoeCrystal

FIRE stands for Financial Independence and Retiring Early

Triumph13

OldMusicGuy wrote: »

I should have been clearer - the frugal lifestyle will happen when we retire. I'm stocking up now on all hobby related items so that I will not need to spend much at all once retired. We'll be living a much simpler lifestyle. Holidays will be pootling around in the classic car, we'll be renovating our downsized house and my wife is into breadmaking, food preserving, gardening and growing veg. Can't wait to ditch the high tech world. I told you we bought into the "MMM" philosophy....:)

I would very much agree with the others about switching to that Frugal lifestyle now whilst you still have the opportunity to change your mind if you find it doesn't suit. That doesn't mean only spending now what you expect to spend then, but it does require some detailed budgeting and discipline to separately identify 'living costs' from 'getting things ready for retirement costs' such as stocking up on tools that will see you out. You need to be very honest with yourself about a) whether a cost really is a one-off that won't need to be repeated; and b) whether the fun of buying all these toys isn't something you are really going to miss when you can't afford to do it any more.

OldMusicGuy

Triumph13 wrote: »

I would very much agree with the others about switching to that Frugal lifestyle now whilst you still have the opportunity to change your mind if you find it doesn't suit. That doesn't mean only spending now what you expect to spend then, but it does require some detailed budgeting and discipline to separately identify 'living costs' from 'getting things ready for retirement costs' such as stocking up on tools that will see you out.

Good advice but I'm quite used to budgeting at a detailed level (I have a finance background), and although for the last 5 years I've been a high earner with no mortgage, before that our living costs were much closer to income. So it will be going back to running a household budget again. Stocking up on high quality tools for all the hobbies is what we are doing right now so that should keep us going for at least 5 to 10 years without major expenditure. But maybe I'll treat the first year of retirement as more of an experiment to see if my plans really do stack up. I have a US IRA that I can bring over as a lump sum of around £25K after US tax and my wife will have around 5K of DB pension income. We'll see how we manage on that for the first year (although we won't have downsized the house at that stage so utility bills and council tax will be higher than after downsizing).

Triumph13 wrote: »

You need to be very honest with yourself about a) whether a cost really is a one-off that won't need to be repeated; and b) whether the fun of buying all these toys isn't something you are really going to miss when you can't afford to do it any more.

This is a great point and it's where the philosophical side of retirement planning comes in (for me at least). My wife and I are a bit on the "alternative" side, we have grown weary of the consumerist lifestyle and in particular I know I have used "buying toys" as a way of making me feel good when work has been stressful. Time for that to stop and instead make time for playing with the toys I have in what little time remains. Like the MMM blog and similar espouse, for us the first rule of retirement will be to reduce expenditure on (what we view as) unnecessary consumer goods to allow us to make the best use of the assets we have.

p00hsticks

OldMusicGuy wrote: »

Like the MMM blog and similar espouse, for us the first rule of retirement will be to reduce expenditure on (what we view as) unnecessary consumer goods to allow us to make the best use of the assets we have.

Why do you feel the need to buy 'unnecessary consumer goods' now ? I don't really understand why, if you feel this way, you aren't making these lifestyle changes now, rather than waiting for retirement.

Northamptonblue

AnotherJoe wrote: »

Ditto. £10k would be well below survival, unless you are counting on benefits rescuing you. And I wouldn't count £30k as luxury in any sense of the word. Or even £10k on top.

Wasn't what I was planning I would be the first to admit. Average desired amount quoted on this thread by early retirees is about £25k though. Presumably, they think that will do nicely for them or they wouldn't be retiring early. My own number is about £32k plus a largish buffer of savings to cover big holidays, new car and contingency. I am retiring in August this year at age 59. Not expecting to spend too much time travelling by private jet but do plan a couple of major holidays.



I suppose that would be peanuts to some and 'luxury' to others.

OldMusicGuy

p00hsticks wrote: »

Why do you feel the need to buy 'unnecessary consumer goods' now ? I don't really understand why, if you feel this way, you aren't making these lifestyle changes now, rather than waiting for retirement.

Netflix, Amazon Prime, Spotify, BT Sport are examples. Stuff that we make some use of but can live without. Right now it doesn't make much difference because I am saving so much that I can "easily" afford these things, but when I have no salary coming in they can go. We're already doing some trimming back (food and household expenses mainly) so have a pretty clear idea of what we need in that area to sustain ourselves. We're also cutting down on stuff like expensive coffees (a weakness). We bought a bean to cup machine, my wife buys the beans in bulk at a cheap price and we worked out that we are getting a week's worth of excellent coffees at home now for less than the price of a large latte from Costabucks (ok not quite so impressive if I included depreciation and electricity). The coffee's much better though.

Like many people I've been guilty of indulging myself (like buying expensive guitars for example) because I "think" I need them and I can justify it because I work so hard (it's a reward for me, right?). I haven't bought anything like that in the last year and I don't plan to. So I guess we are on the way but not fully there yet.....

OldMusicGuy

Northamptonblue wrote: »

Wasn't what I was planning I would be the first to admit. Average desired amount quoted on this thread by early retirees is about £25k though. Presumably, they think that will do nicely for them or they wouldn't be retiring early. My own number is about £32k plus a largish buffer of savings to cover big holidays, new car and contingency. I am retiring in August this year at age 59. Not expecting to spend too much time travelling by private jet but do plan a couple of major holidays.



I suppose that would be peanuts to some and 'luxury' to others.

And it shows very nicely why it's so hard to say what the "number" is, because it's so much down to personal preference and lifestyle choices.

Bootsox

Since it started, there does seem a general trend on this thread for an increase in "the NUMBER".

Seems like the old mantra figures have gained £5-10k each, £25k has now become +£30k, etc.

Which makes sense, as this country seems a very expensive one to live in on a day to day basis (I put this down to the large number of indirect taxes and their trickle down effect).

The cheapest coffee shop coffee these days is over £2, nearer £2.50.

Although I did discover yesterday that you can get a Waitrose sit in coffee for the price of a banana (25p) and you get to keep the banana.

justme111

AnotherJoe wrote: »

Ditto. £10k would be well below survival, unless you are counting on benefits rescuing you. And I wouldn't count £30k as luxury in any sense of the word. Or even £10k on top.

Median household income for 2 according to google is £24000 , median salary £28000. I suppose discrepancy in numbers is due to non working, part time working people and already retired households being included in the first one. If you take into account taxes, NI, mortgage, children related expenses that will go with retirement it leaves the number close to £10 000 so for majority of people retirement on it will not mean any reduction in disposable income let alone make it "below survival".