How Much Do You Need

nassausteve

I have no mortgage. Two properties with a total value of circa £650k. Savings of about £150k. A final salary pension scheme currently worth about £26k pa (based on 27 year's service in the local govt pension scheme). I am hoping to keep in employment until I am 55 (approx 2 years time), by which I will also be covered by the '85 rule' - if I am made redundant. How much annual income do I need to ensure a 'comfortable' retirement ?

mitchaa

nassausteve wrote: »

I have no mortgage. Two properties with a total value of circa £650k. Savings of about £150k. A final salary pension scheme currently worth about £26k pa (based on 27 year's service in the local govt pension scheme). I am hoping to keep in employment until I am 55 (approx 2 years time), by which I will also be covered by the '85 rule' - if I am made redundant. How much annual income do I need to ensure a 'comfortable' retirement ?

Silly question, do you live a playboy lifestyle, have an Audi R8 on the drive and go on a handful of foreign holidays every year? Or do you live in a 1 bedroom flat, no car, no real expenditure and live frugally?

Only you will know how much you need, the average person I would say would need around £20k to live comfortably. (Assuming mortgage/rent free) You've matched that already with your FSP worth £26k Gross (Around £20k net) Then you have rental income from 1 property and then interest generated by your savings.

You're clearly not going to struggle unless you have expensive tastes

yelf

seems like a joke question imho

Niggles

Look at the thread Pensions Planning the NUMBER.
It is all discussed there.
https://forums.moneysavingexpert.com/discussion/2146737

jamesd

nassausteve, the minimum threshold I'd use for living comfortably is around £12,000 a year, sufficient to pay rent and living expenses in most of the country. How much more than that is required depends on your current lifestyle and the one you want in retirement.

You can reasonably expect to take 6% of the capital value of investments (not savings) as income and still keep up with inflation, though 5% would be a more cautious value to use for early retirement. At 6% the £150,000 of savings, if invested, could produce around £9,000 a year to bring your income to around £35,000. Selling or letting out one or both properties might also be appropriate for you. £35,000 a year of income would be very well into comfortable for most people, since average earnings are nearer £28,000 a year and you won't be paying NI.

If you were to sell both properties and invest the proceeds you might get another £39,000 a year of income, sufficient to give you considerable flexibility and mobility in rented accommodation if you like the idea of exploiting your potential freedom to explore the country or the world by living in a range of places.

margaretclare

As others have said, it's impossible to answer this without knowing details of your lifestyle, future plans, family commitments, hobbies, the type of life you hope to have long-term and into retirement.

You can add up your basic expenses and then deduct from them the items that won't apply in retirement years e.g. if you expect to have no mortgage by then. Travel to work, lunches, work clothes etc are things that will diminish, but some things may increase e.g. home heating if you're at home in the daytime. You can add all this up and increase for inflation. Then, you can add up the income you expect to have - state pension for instance.