Could you retire on half your current income?

seven-day-weekend

ReportInvestor wrote:

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 villa holiday in Spain I couldn't believe how cheap the supermarket bills were [loo paper stood out in my mind for some strange reason].

QUOTE]

Our Spanish 'Council Tax' is 80 euros A YEAR!

Plasticman

While I may be able to live off half my income, I won't be expecting the state pension to provide it. I think that the pension is currently £84.25 per week which (if half your earnings) means that you would be earning £8,762 pa in your job at retirement. Even if the link between earnings and pensions is re-established, it only means that this figure will be keeping pace with wage increases. Most people I know earn a lot more than that. I have made separate pension provision. If the state pension increases then it will be a bonus (and I can get a new pair of pants...............). Unless, of course, they decide to means test it - in which case I will probably get nothing :rolleyes:

MABLE

When my mortgage is paid it certainly will be easy to live off half my income.

farhad1965

Yes I can - we currently have 50% going towards mortgage, savings and pension premium. So as a retired person, even the 50% would be more than adequate.

jamesd

Excluding rent but including all other bills I currently budget to live on about 110 a week and barring occasional expenses typically spend under 90-100. So, I've little doubt that I could live on the combination of baisc state pension plus pension credit and council tax benefit combined with the other benefits available.

Half my above national average income isn't a bad target for me.

margaretclare

tanith wrote:

If only people who still have the choice would see sense and start saving now before its too late....

Oh how I agree with you!!!

I've lost count of the number of posts I've read on this and other sites, letters in the local paper and people I've heard talking, saying: 'it's not worth saving, I worked hard and saved and now I can't claim any benefits, next door never worked or saved and now gets everything.' You hear this kind of thing said all over the place. Just yesterday on another thread here someone was saying he was coming up to retirement at 60 and how could he 'lose' some of his assets so as to bring himself under the means-testing threshold. It's one thing if you have no option, forced to retire early on health grounds, or - as happened to me, widowed and redundant at the same time aged 56 and still needing to work and pay a mortgage - but to have assets and choose to 'lose' them so as to be able to claim means-tested pension credit??

Until we get rid of this idea that 'it's not worth it to save because if I save I can't claim anything' then I don't think we will get anywhere. We have this dependency culture - 'what can I claim, what am I entitled to?' And I really deplore it.

People who know I'm still saving say 'what are you saving for at your age?' Just that DH and I can easily live another 20 years and we don't know (as Donald Rumsfeld said!) what can come along in that time.

DH and I are better off than we've ever been in our lives. It's true there are things you don't spend money on - DH doesn't need business suits and ties and a clean shirt ironed for him every day. He mostly lives in sports shirts and chinos. We don't use free bus passes - we still have our little Fiesta and we intend to keep on driving for as long as we possibly can. It's been great since we did equity release to pay off the mortgage - that's £260 a month freed up for other (more pleasant) purposes. But then, we have got a good income...

Margaret

EdInvestor

Plasticman wrote:

While I may be able to live off half my income, I won't be expecting the state pension to provide it. I think that the pension is currently £84.25 per week which (if half your earnings) means that you would be earning £8,762 pa in your job at retirement.

Don't forget there are 2 state pensions - the basic pension you mention and the second state pension S2P (formerly SERPS) which is earnings related on top. People retiring now who have a full NI record (not contracted out into a company pension) and a salary towards the upper earnings limit c.34kwould get as much as 12k from the two state pensions.

This would cost you nearly 300,000 quid in savings to buy on the open market, the index linking is especially valuable.Even the basic state pension would cost around 120k.

Check out your personal entitlement here:

https://www.thepensionservice.gov.uk

ReportInvestor

Much good sense there. I hate our insidious dependancy culture. You only have to compare financial websites here, and in the US to see a totally different mindset. Theirs is "what can I do myself to realise my dreams?"

Great signature, BTW, Margaret. I think of you whenever I drive through Putney .

Your 17th Century Levellers wouldn't have relied on the state, or not planned for the future had they lived today. They'd have seized the opportunities available to them that they were denied at the time.

But I digress.

The concensus seems to be emerging that we shouldn't be compacent, should also save/invest for unseen eventualities & our dreams - but as long as we do this, there probably isn't a "pensions' crisis" of the sort that often hits the headlines

clairehi

What concerns me is that people get the impression from articles like this that saving enough for retirement is an impossible task,so they just give up and push it to the back of their minds.

I was actually pleasantly surprised when I did the sums of how much we would need to live on in retirement compared with our pension forecasts. Once you take the eye-watering mortgage repayments and childcare out of the equation our needs are quite modest.

ReportInvestor

I agree claire.

The government has chosen to give us our pension forecasts in a very downbeat way - index-linked & partner getting 50% of your income on your death. [This sum is not necessarily appropriate for many modern two-income couples.]

I think the government has done this because of our dependancy / compensation culture (i.e. HMG doesn't want to get sued by anyone who ends up worse off then the government estimated they might be).

But far from incentivising people into action, the very low income forecasts are resulting in many people throwing up their hands in horror at the apparent scale of the task and thereby doing nothing!

Talk about the law of unintended consequences.

Here's a classic example on MSE 2 days ago - Chris had a fantastic offer from his employer that he wasn't going to take up because he thought it looked poor value at first sight

And also the government can't push saving through hard hitting adverts because its means testing regime, and the details are still to be decided, means that they might also be sued for "mis-selling" (or miss-pushing) personal pensions onto low earners.