How much do you need to retire?

Loughton_Monkey

It is partly psychological, and partly 'common sense' that when we retire, we need (want) to continue spending roughly the same amount. [Note this is not the same as having the same income].

Our lifestyle is firmly set by the amount we spend. When we retire, we still want to insure and maintain our house, and keep the gas/electric supply going. We want the same quality of food, the same type of holidays, do the same for Christmas, drive around in the same quality of car.....

Whether you are a brain surgeon, or a lowly paid supermarket worker, you have the opportunity during the last 20 years or so of working life to manage the cost of your lifestyle carefully so that it can be maintained when you retire. It's basically simple mathematics. Every £1 that we choose not to add to our cost of living is another £1 in the 'pension fund'.

We are all individuals with our unique combination of circumstances, income, needs, desires, savings..... When that magic day of retirement comes, it does not turn us into 'zombies' who follow a textbook definition of 'what income we need in retirement'.

coastline

greenglide wrote: »

But does that include State Pension?

But looking at the number who are entitled to Pension Credit (whether they claim or not) there is certainly a large number of people over the age of 65 who many of us would call "poor" or worse.

Whether people can live on £10,000 a year depends on lots of things. Housing costs is one.

Without the State Pension many of those links are well under £10,000 and nearer £5,000.

Notfarfromtheborder

torbrex wrote: »

My current income is £2600 so it is a rise, I have been surviving quite well on that for the last 3 years.
I see no reason why I can't continue the trend.
I have a seperate holiday fund and that will be put to good use for my upcoming trip to Hawaii with no impact on my 'living' funds.

Torbrex, is it £2600 per year or per month????

torbrex

Notfarfromtheborder wrote: »

Torbrex, is it £2600 per year or per month????

that is per year, I take home aprox £215/month.

PlymouthMaid

How do you manage to live on that Torbrex? - my council tax alone is almost half of that let alone utilities. Incredibly well done though. I will need all your tips one day as I have a low enough income now but it will be shocking once I retire.

kwmlondon

I'm on a final-salary pension as I work for a university. I get 1/80 of my salary for each year I've worked. I'm on about £40k at the moment and have nearly 8 years racked up so I've already got a £4k a year pension when I reach 65. I also have a private scheme that I'm paying £80 a month into just because I'm wary about relying on any one source and the government chips in to take it up to £100. If I leave this sector I'll start paying in 10-15% of my salary to the private scheeme. I should be able to expect about £18k a year when I retire, but I'm 39 now so not really worrying too much about it.

kangoora

torbrex wrote: »

that is per year, I take home aprox £215/month.

Then you really deserve the title 'Mega Magnificent Maxi-Meticulous Uber-MoneySaving Magnate" by your name.

I can't understand how that can be possible, we live in a relatively cheap area of the country and our utilities, insurances, co. tax add up to circa £500/month for a couple (4 bedroom house admittedly). We could, at a push, drop some items from the list below and some would reduce if we down-sized but nowhere near to being able to survive on £215/month seeing as these are just bills and don't include food, holidays, car maintenance, recreational activities etc

Co. Tax: 140/month (10 months)
Gas/Elec: 112/month
Water: 35 month
Life ins (2): 61/month
Mobile phone (2): 21/month
House Ins: 18/month
Phone/Internet: 12/month
TV Licence: 12/month
Pay TV: 22/month
Pet insurance: 20/month
Car insurance: 35/month
Lottery: 16/month (nice to have a dream )

Would you care to share?

torbrex

PlymouthMaid wrote: »

How do you manage to live on that Torbrex? - my council tax alone is almost half of that let alone utilities. Incredibly well done though. I will need all your tips one day as I have a low enough income now but it will be shocking once I retire.

Council tax is paid from a seperate fund, it was £76/month last year, I have no mortgage, it was paid off some years ago.

I have been poor on low income a few times in my adult life so I've learned how to be frugal when I need to be, it also helped me to save when times were good.
My grocery bill averages out at under £20/week and utilities are £67/month.

Notfarfromtheborder

torbrex wrote: »

that is per year, I take home aprox £215/month.

Good effort, would love some tips!

Triumph13

Loughton_Monkey wrote: »

Every £1 that we choose not to add to our cost of living is another £1 in the 'pension fund'.

I'd go much further than that. If you have 20 years until retirement and instead of spending that extra £1 a year you put it in your pension with basic rate relief, that's £1.25 x 20 = £25. Plus you'd have investment returns on that of another £9 or so assuming 3% pa real terms return. But you also don't need the £29 plus change that you'd need to fund the £1 a year spending in retirement (4% withdrawal rate 25% tax free, basic rate on rest).


So you can change Loughton's numbers to read "Every £1 a year that we choose not to add to our cost of living is effectively another £63 in the pension fund !.