How much is enough?
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I wouldn't call avoiding the poorhouse a balance. Balance is looking at your lifetime sustainable income and modifying your spending patterns accordingly.
If you overspend in your working years then you face a double whammy at retirement - not only will you be forced to adopt a cheaper lifestyle than if you'd saved, but you'll also have got used to a more expensive lifestyle, doubling the pain.
What do you define as 'overspend'? Driving a new car when you could buy an old banger instead? Going on a 5 star hotel holiday in the Caribbean when you could slum it in a 2 star dump in Turkey?
Why should you waste the best years of your life scrimping and saving every penny in order to be a millionaire pensioner? I don't see your logic. Saving is admirable - I am putting away 34% of my salary including my employer's contributions and already have a £300k fund at age 47 - but depriving yourself isn't such a good idea. If I saved 60% I would have my ideal retirement fund but it would force me to hardship now, and I'm not prepared to do this.0 -
In order to have the same lifestyle in retirement as you did earlier on you need to save an awful lot, unless you are lucky enough to have a final salary pension for 40 years. .
Just choose some numbers...
Say you have £35K net income whilst working and £10K SP and company pensions whilst retired. What do you do? You could live the best life you can whilst working and scrape by on just over a quarter of your working income in retirement.
A balanced solution seems to me to live on say £25K whilst working if saving £10K per year would buy you £15K/year in retirement at current prices.
The same principle applies no matter how much income you have.0 -
Just choose some numbers...
Say you have £35K net income whilst working and £10K SP and company pensions whilst retired. What do you do? You could live the best life you can whilst working and scrape by on just over a quarter of your working income in retirement.
A balanced solution seems to me to live on say £25K whilst working if saving £10K per year would buy you £15K/year in retirement at current prices.
The same principle applies no matter how much income you have.
There are lot of ifs and buts here. Unless you enjoy a defined benefit pension you cannot simply calculate that if you put in a given percentage of salary in you will end up with a given amount of pension at age 65 - or whatever age you choose to retire at. It doesn't work like that with money purchase pensions. You put in what you can reasonably afford to put in and hope that the investments will do OK. At present I am on course for a private pension of £22k a year with the SP as an extra. This will be enough for me to live a 'normal' lifestyle similar to my current one, bearing in mind that I won't have a mortgage and will not have to pay NIC on the pension.
I could save more, but why? I need to live now as well.0 -
I'm having a very hard time with this all, each calculator give a different amount and I really struggle to understand percentages involved.
I current have around 20k in a managed fund and pay £100 a month raising to £180 in 2017 and £300 in 2018, (all with employer contributions.)
Our bills for 2014 average out to 9k before mortgage, gifts and holidays, so if I assume 15k for both of us, I don't think this would be way off the mark. (Being mortgage free at that point).
I don't understand if i'm on track or way behind, as no calculator will take the lump sum into consideration as it is a separate amount.
It's all very confusing.
Try http://www.cfiresim.com/input.php
You'll need to spend a little time getting the hang of it but it is very flexible (plus you can register for free and save various scenarios). There is Another Income section where you can add one-off or recurring sums.
No, it's about living within your needs. When my salary rose 35% I didn't inflate my lifestyle - I think I added £50 cash to my monthly budget and saved everything else.It's about living within your means.
It doesn't have to be sackcloth and ashes or Gucci - or the analogy of 2* Turkey vs 5* Caribbean. What's up with 4* Madeira for example as a compromise? Or a good quality aparthotel and eat out in local places most nights? A 20 year old rust bucket that breaks down every 100 miles isn't the only alternative to a new BMW every 3 years.
I could have a much more affluent lifestyle and have to work a hell of a lot longer to fund a frugal retirement, or work to retirement age or beyond to fund an affluent retirement. Or retired a few years ago and be struggling to make ends meet. Instead I've chosen a comfortable life and a comfortable early retirement - yes, I'd like a little bit more - but not so much I want to work 'one more year' and then another 'one more year'. Be mindful of what you spend and ask yourself if that 5* dinner out is worth a week on your working life?A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
Mortgage Balance = £0
"Do what others won't early in life so you can do what others can't later in life"0 -
No, it's about living within your needs. When my salary rose 35% I didn't inflate my lifestyle - I think I added £50 cash to my monthly budget and saved everything else.
It doesn't have to be sackcloth and ashes or Gucci - or the analogy of 2* Turkey vs 5* Caribbean. What's up with 4* Madeira for example as a compromise? Or a good quality aparthotel and eat out in local places most nights? A 20 year old rust bucket that breaks down every 100 miles isn't the only alternative to a new BMW every 3 years.
I could have a much more affluent lifestyle and have to work a hell of a lot longer to fund a frugal retirement, or work to retirement age or beyond to fund an affluent retirement. Or retired a few years ago and be struggling to make ends meet. Instead I've chosen a comfortable life and a comfortable early retirement - yes, I'd like a little bit more - but not so much I want to work 'one more year' and then another 'one more year'. Be mindful of what you spend and ask yourself if that 5* dinner out is worth a week on your working life?
I'm not disagreeing with you, but people's needs differ. Anyway, everyone has different circumstances, so the discussion is necessarily generic.0 -
People's needs are basically the same - food, shelter, clothing, warmth etc. It's the amount you're prepared (or able) to spend on each that differs. Everything else such as holidays and eating out etc. is down to personal choice. Though looking at the miserable weather I could be persuaded a holiday in January was a needI'm not disagreeing with you, but people's needs differ. Anyway, everyone has different circumstances, so the discussion is necessarily generic.
) A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort Mortgage Balance = £0
"Do what others won't early in life so you can do what others can't later in life"0 -
What do you define as 'overspend'? Driving a new car when you could buy an old banger instead? Going on a 5 star hotel holiday in the Caribbean when you could slum it in a 2 star dump in Turkey?
Why should you waste the best years of your life scrimping and saving every penny in order to be a millionaire pensioner? I don't see your logic. Saving is admirable - I am putting away 34% of my salary including my employer's contributions and already have a £300k fund at age 47 - but depriving yourself isn't such a good idea. If I saved 60% I would have my ideal retirement fund but it would force me to hardship now, and I'm not prepared to do this.
Overspend is relative to your lifetime sustainable income.
Overspend in your example is driving a brand new BMW now if it means you'll only be able to afford an unreliable old banger (or the bus) in retirement. Balance would driving the level of car that you could afford both before and after retirement. No-one on here has been arguing that you should spend your working years at a level of luxury significantly BELOW that of your retirement. It's all about sustainability and maximising lifetime happiness.0 -
I'm not disagreeing with you, but people's needs differ. Anyway, everyone has different circumstances, so the discussion is necessarily [STRIKE]generic[/STRIKE] a bit of a waste of time.
Fixed that for you.
Joined this morning, 32 posts, all quite contrary. Now on my ignore list.The questions that get the best answers are the questions that give most detail....0
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