Could you retire on half your current income?

ReportInvestor

Tiscali scare story - Pensioners face 50% drop in future income

Is it so awful to have to live off half your current income once you have paid off your mortgage and seen off the children?

Is this a real worry or merely an investment industry / news agency scare story?

dunstonh

Most could survive on a 50% drop without children and mortgage gone providing they havent got used to the mortgage and children being gone already.

I'm in two minds about these sort of things. You make a generalisation and it may not apply to all and it is easy to think of it as a scare story. However, if people get complacent and do nothing, they will be a lot worse off than a 50% drop and the scare story may remind them why they do it. Or encourage them to do more.

Plasticman

I would be happy to have a pension paying half my current income when I retire. No kids (they would have moved out), no mortgage (paid off by then), no travel expenses for work (I can go anywhere with my free bus pass!), no need for new suits or dry cleaning (I can slob around the house in my pants ).

ReportInvestor

Nice extra points from Pm (especially commuting but watch it re the bus passes - they run out in many areas and Councils may have to reassess once the number of wrinklies explodes in the next couple of decades). Not sure about the pants, though :rotfl:

I very much agree with dh's overall assessment (avoid complacency), even though he usually advises me to ignore press scare stories .

It must also depend on your retirement dreams.

Live quietly?
Travel the world as a reward for a lifetime's work?
Keep one pad in the UK and a sunshine pad further south?
Set up your grandchildren for life / fund their private education?

tanith

The answer to this question is YES if there is no alternative.... I am facing this exact scenario on December 27th when my Ill-Health Retirement date comes round.. I had to apply for Ill-Health Retirement as I was physically incapable of doing my job anymore... and my pension is way below half my present salary. I will have to claim IB to try to top up my pension until I can find a suitable part-time job... I am 58 so my State Pension does not kick in for another 20mths I still have a mortgage too and am eternally grateful that my OH has a job where we would be if he lost it goodness only knows.......If only people who still have the choice would see sensed and start saving now before its too late....

bristol_pilot

Also no pension contributions or national insurance when retired.

EdInvestor

Plus higher tax allowances ( though maybe not high enough - use your ISA! )

ReportInvestor

Good additional points from tanith, b_p and Ed .

As Donald Rusmfeld might say, there are unknowns you know about and those you don't :rolleyes: (Sorry to compare war and retirement planning .)

So a bit of forward planning, insurance planning rarely goes amiss.

At this rate we'll start questionning the excessive pension arrangements of FTSE directors much more closely .

tanith

When I realised what was about to happen I panicked at the thought of the drop in income but now I have had time to sort out some stuff, and with some excellent help on this site the prospect of losing more than half my salary is at least copable with... I could just manage without a job with OH helping with more than his fair share of bills but we will have a buffer if I manage to find some part-time work... I will have to keep an eagle eye on my spending from now on...

seven-day-weekend

We have taken early retirement on much less than half our salaries.

Before we gave up work, I was working three days a week and earning around 8k a year (gross); hubby was working 2.5 days a week and earning around 14k a year gross. So, there was a total of £22k a year.

Our income now is around 7.5k from my husband's teachers pension. This has been reduced as he has taken it early, and I can't get my LA pension until I'm 60 at the earliest. Neither of us is old enough for a State Pension. We wiill both qualify for full State Pensions when we reach that age.

We can live quite well on this is southern Spain. We would struggle if we had to live on it in the UK.

ReportInvestor

seven-day-weekend wrote:

We can live quite well on this is southern Spain. We would struggle if we had to live on it in the UK.

And maybe also in Romania, Bulgaria etc. in the future ? There seems to be a property trend in this direction for better or worse.

The last time I had a self catering appartment holiday in Spain I couldn't believe how cheap the supermarket bills were [loo paper stood out in my mind for some strange reason].

To say nothing of the superior quality of the fruit & veg .

Of course in the EU your UK state pension continues to be index linked Unlike in some other retirement destinations like Australia or South Africa .