Could you retire on half your current income?

margaretclare

nearlyrich wrote:

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 independent and look after my own needs.

I agree with you. Nor do I look at what other people have or do - it's up to them.

The people who I think are most affected by this 'it's not worth working and saving because someone else gets it all' are the people on the borderline. The people that givememoney describes, who are enthusiastic motor-home-owners and appear to be happy, are unlikely to be as close to the margins as all that. They're more likely to be similar to us - comfortable, able to go on holidays by whatever means they prefer.

Today I sent an email to several friends and relatives saying 'don't bother sending us a Christmas card this year, we won't be here, we're going on a Rhine cruise over Christmas'. And I got a response back from an old friend, who says ditto - he and his wife have just bought a motor-home because going away was difficult with the dog, they've splashed out on this motor-home because, as he said 'what's the point of being the richest person in the graveyard?' I agree entirely, and although we're still saving, we're not worrying about IHT or who to leave assets to, we intend to enjoy it while we've got it.

Margaret

novice-saver

50% of salary isn't bad going for a DB pension.

As far as I know there is/was an upper limit of 2/3rds anyway, and that takes a lot of years to accumulate at 80ths, 60ths, or even 50ths.

Regarding a future pension equivalent to 16K in todays money, the trick is to understand its buying power today, and not worry about ther numbers too much - provided that you have adjusted your spending habits by retirement time, it all keeps track, and your employer/pension fund survives.

ReportInvestor

Hi n_s,

We are thinking more along the lines [state pension + occupational pension + savings/investment income] = [50% of current income when working].

You are right that many people don't reach the upper limits on their occupational schemes.

benood

It's galling to think we might work hard pay a lot of tax and end up about as badly off as people who choose to do the opposite.

Until the benefits system in the UK is rethought we will continue drifting towards state responsibility from individual responsibility, reducing incentives to save, work, think etc

There's no chance of the government making the necessary changes, there's a votes in maximising the number of Subjects dependant its largesse.

Right, what's the thread again, retire on half current income? no problem, assuming no mortgage school fees etc. Remember in a few years it'll be as warm here as southern Spain, think of the savings on the gas bill.;)

seven-day-weekend

benood wrote:

Remember in a few years it'll be as warm here as southern Spain, think of the savings on the gas bill.;)

I live in southern Spain and it's bl**dy freezing in the winter! I'd never had an electric blanket till I lived here!

Having said that, my little house is perched at the edge of a village on a mountain at an altitude a little bit higher than the summit of Snowdon.....:rotfl:

As I mentioned before, we have retired here on around 1/3 income. We do have our State pensions and my LA pension to come though.

jamesd

benood, the government pension plans are to try to make sure that the pension level is above the means-tested benefit level so that there is an incentive to save. If the basic pension exceeds benefits, then any saving will be additional money you get that you don't get if you don't save. One of the ways they are planning to do this is by linking the pension level to the income growth rate.

EdInvestor

One of the major problems ( now being fixed) has been the serious difficulty many less well-off people and women have had in accumulating a decent state pension, because of the way the entitlements are structured.This effectively excluded people doing part time work and working for less than a full year from acquiring enough years to get the pensions.

A second problem has been the complexity of the second state pension (S2P formerly Serps) made worse by the contracting out setup introduced in 1988. If everyone had been in S2P/Serps since it was introduced in 1978, then if they had a full work record and an average salary, they would probably be due a total state pension of double the basic, in the 10k range.

This is clearly much more than basic benefits, is not means-tested, and provides an incentive to save more, (and to own you own home - which 70% of us now do.)

But the politicians have persistently fiddled with the system for various reasons over the years so that it has become dysfunctional and almost impossible to understand.

Nevertheless it's still worthwhile to apply for a state pension forecast to see what you are in line for later.

https://www.thepensionservice.gov.uk

Given the general confusion about S2P/Serps, some people may be in for a nice surprise .

givememoney

There appears to be the idea that once you retire you don't need much money.

As I said before hubby and I are not quite there yet, but it won't be long.

We don't have a mortgage now, but even so there is still the following:

Food, clothes, shoes, utitlities (probably more as we will be home more), car expenses (OK we'll have a bus pass but for longer trips), council tax, insurance, hair appts, dentistry (we've still got our own teeth so far!) broadband, eating out occasionally, glasses (extra expense we didn't have once), decorating, replacement of white goods.

These are just what I can quickly think of. Personally I hope we can carrying on as we are now but I haven't actually done the sums.....too frightening I guess.

We do have savings and are relying on dipping into them to help out.

margaretclare

I agree with givememoney. There are things you don't need to spend too much on - obvious things like the mortgage, travel to work, work clothes, children - but there are things which remain fixed.

One of the reasons that I am still saving is that I know that, in the very nature of things, one of us is eventually going to be left on his/her own. Apart from a 25% reduction in council tax for someone living alone, and a reduction in food, running a home costs almost as much for one person as for two.

Givememoney mentions the cost of glasses and dental - well, I've had expenses for glasses since I was a teenager half a century ago, so that's no different. DH and I are long-standing members of HSA and we get money back for things like that. We even get money from them for hospital stays - we each received a payment for his 7-night stay recently for knee replacement. Givememoney mentions white goods - our 3-year old fridge-freezer has recently started making a funny noise and DH has just paid £90 call-out charge for an engineer's visit. He says jokingly that the £100 he's about to get for winter fuel payment will cover that very nicely!

Bus passes - we don't use them, we still intend to keep on driving for as long as we can. However, our little car won't last for ever, we may possibly be looking at replacing it next October when its MOT needs renewing again.

Margaret

ReportInvestor

There's much more scope for going down from two cars to one - depending on your social life / leisure interests.

With less pressure on time, you arrange things around the one car e.g. Wednesday morning is John's golf time whereas Thursday afternoon is Judith's bridge class etc.

If you do it this way you can always book a taxi in emergencies. I insist on my mum doing this and she has gradually come round to the idea because she can see how much she has saved by not running a car.