Could you retire on half your current income?

givememoney

Haven't retired yet but I am due to next year. At the moment God willing I intend to carry on as I only work 3 days a week, enjoy the job and get quite well paid for it. I am also on final salary pension which in my case isn't quite as good as it sounds because I am only part time as I said, plus I have only been in the job 6.5 years.

Hubby and I are enthusiatic caravanners and all the time we meet retired people who seems to be doing very nicely thank you. They have new vans being pulled by new cars and in between times take holidays abroad staying in hotels etc.

Perhaps it is just the people we meet, but over all it seems pensioners are better off these days than days gone by.

oldandhappy

We retired early. Mr. Old had a works pension and we also downsized and moved from Surrey to Bexhill on Sea where property is much cheaper and the air is fresh too.. we invested the 'profits' and also sold our spanish apartment that was bought for an investment for our retirement (as well as the great holidays we had out of it over the many years)That was our main way of saving for a comfortable workfree life. Mrs. Happy

Techno

I very much understand their feelings too. I believe in saving for my old age (which seems to be approaching ever faster) and hopefully will be way over the thresh-hold for claiming benefits but get so annoyed with people who live off the state all their working life (when they could work) and then continue to do so when they retire! The government needs to make it worth people's while, especially if they are on a lowish income, to 1. actually go out to work and 2. save for the future.
Example step-sister has 5 kids by 4 different fathers, has hardly ever worked (not because she isn't able) but claims every penny she can off the state, free housing, no council tax etc.
Sister has 2 kids - she and hubby have worked since they left school but end up with less after childcare every week than step sister and I bet the same will happen when they are both retired (same age)
Don't get me wrong, there are people out there who genuinely need benefits but there are an awful lot where I live who could work/won't work because the state pays more than a job would and they are relying on that to continue when they retire. I hope I don't sound totally unfeeling but personal experience has taught me to be cynical
So back to the point - is it fair that those who have saved a bit for their retirement should have to live on less than those who haven't

ReportInvestor

It obviously isn't fair if that were to happen.

I don't want to digress too much but:

Solid partnerships don't just create good marriages, they are also good financially. Even assuming that neither your sister nor her husband have a works pension, they will qualify for the state pension and S2P in their own right. And if they are buying their own house, that will also be an asset.

After your step-sister's children have left home she will lose many of her benefits. I know how you feel. We also have a "black sheep" in our family who shamelessly milks the system.

EdInvestor

...there are an awful lot where I live who could work/won't work because the state pays more than a job would...

Err, these people are not doing anything wrong. They are just responding to economic incentives, we all do that.

It's the state that's getting it wrong, by incentivising people not to work.

Why would any sensible person go out to work if they would be economically disadvantaged by doing so, compared with relaxing at home?

The savings issue is very similar, as Seven Day Weekend outlines.Of course people will feel bitter if they have made the effort to save, only to discover that those who didn't are in the same position or even better off.

This is a policy failure matter.

Jake'sGran

EdInvestor wrote:

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

I do respect your posts! We manage very well on two very small private pensions, plus state pensions and dividends/income payments from investments. In the letters sections of Times Money etc there always used to be someone saying that non taxpayers really don't need PEPs and ISAs but I have always used them. Maybe it's because I started when I was working full time and started getting interested in investing for retirement as I knew my pension would be small. As a result of using the tax wrappers I remain a non tax payer and we live comfortably and can buy whatever we want. Someone might say that the tax I would pay on savings would be less than the charges paid on PEPs and ISAs but I don't think there would be much in it especially if a discount broker is used. You can get into the habit of doing things the most economical way. For example, I have discovered that booking direct with hotels abroad is a much cheaper way than buying package tours. I buy in bulk when I see offers on things we would normally buy. Just a couple of examples but yes, it can be easy living on half your former income.

nearlyrich

No problem for me, I intend to retire as early as I can, I have been contributing to pensions and saving as much as possible for about 20 years. Once my children are self sufficient I will be looking for an easier life.

I also think it's my responsibility to plan and prepare for my retirement, I don't look at what other people have and do, I prefer to be independant and look after my own needs.

Techno

Ed - I agree with you - I'm not particularly saying they are doing anything wrong - although it does get up the nose of those in the same boat but who are working - what is wrong is that it is worth people's while to remain on benefits because they get less by working (and no I'm not saying benefits should be reduced, I'm saying like you that the system is at fault and that there should be more incentives for people on lower incomes so that they are able to keep more of the money they earn)

wotsthat

Why would any sensible person go out to work if they would be economically disadvantaged by doing so, compared with relaxing at home?

I completely agree with your sentiment Ed but plenty of sensible people go out to work even though they are disadvantaged to do so.

It's because they are forward thinkers hoping that with some application they can build a better future for themselves and their families by getting themselves above the benefits threshold.

No Government is going to get people to work who basically can't be arsed but I'm sure that some bright spark would try and sue the Government under human rights legislation if they tried to incentivise the ambitious but discriminate against the bone idle.

It must be a shock to some older people now that they have been penalised for having small savings but the Government is making it clear that you've got to look after yourself because they won't (apart from keeping you at around the breadline).

For younger people like me (39 - ok youngish!) I've a choice, I can say "sod it, it's not worth saving because the Government will give me £115 a week or so in pension credit" or I can say "£115 a week, that's rubbish I'm going to save hard to make sure I'm well above this level".

My plans for retirement don't include worrying about non-savers getting something I'm not - I want more from retirement and I'm willing to do without now to save for it.

wotsthat

Sorry - a little rude; I didn't answer the original question.

Yes without mortgage etc I could comfortably live on 50% of my wages but it's not something I want to do.