How much do you need to live on?

lalman

Okay I know some of you hate it when I do this but I like hypothetical questions...


How much if you didn't have a mortgage or car payments do you personally need per month (linked to inflation) to:


Just get by
To live comfortably


After tax numbers please :-)

166million

I don't have a mortgage. Should I inlcude rent?

Including rent, we could get by on about 1000 a month.
To live comfortably its more like 1200

without rent its about 475 a month

NoMore

Several threads in the pension board discussing this, it crops up in there all the time as people are trying to figure out if their pensions is enough to retire on.

Gadfium

How long is a piece of string?

Personally, I wouldn't fancy retiring on much less than £25k per annum (in today's money)

Tokyo_8

Gadfium wrote: »

How long is a piece of string?

Personally, I wouldn't fancy retiring on much less than £25k per annum (in today's money)

OK - so to achieve that how much would need to be in your pension pot/portfolio to achieve that return?

Or in other words how would you make that happen - just so I can get my head around it!

Mistermeaner

Tokyo_8 wrote: »

OK - so to achieve that how much would need to be in your pension pot/portfolio to achieve that return?

Or in other words how would you make that happen - just so I can get my head around it!

assume a return of 5% per annum on whatever investments you have with no draw down (i.e. capital is preserved) = £500,000 in the bank

Mistermeaner

or to go into a bit more detail you could assume a statement pension of £5K/annum and draw down over 20 years (how long will you live) and off the top of my head maybe £300K would cover this

bowlhead99

I generally work off a few different buckets:
- Food / groceries
- Utilities: gas, electric, council tax, water, phones, broadband
- Leisure: vacations / travel, gym, Sky, TV/hifi/computers, TV licence etc
- Transport: commuter season tickets, car depreciation, car maintenance, MOT, tax, insurance, petrol
- General Other - clothes, white goods / home improvements / home maintenance, presents, charities
- Pension

So that's 6 buckets, if I said £500 per month per bucket there will be headroom in all of them which can be reallocated to savings, investments, rainy day and/or extra socialising.

However £3k a month net is £50k a year gross and that's without mortgage. I don't personally need these amounts but I would like to have these amounts and would agree with Gadfium that I wouldn't want to retire on less than half of them. In reality I take home more at the moment and don't plan to change that any time soon as have a long way to go before retirement is feasible.

Tokyo_8

So a strategy would be to try and create a pot as big as you can, then
draw off of the capital to a tune of 5% because you can get that return
annually from the pot in 'safe' investements?

Gadfium

Tokyo_8 wrote: »

OK - so to achieve that how much would need to be in your pension pot/portfolio to achieve that return?

Or in other words how would you make that happen - just so I can get my head around it!

Well, I have a long way to go to get to the figure that I have in mind.
I have a fairly small investment pot thats currently just into 6 figures. I aim to double that in size in the next 5 years (very doable as I have a Sharesave that matures in 2017 which, at current prices, will deliver about £38k). Who knows what the shareprice will be like though! From there, I want to have about the £500k mark by retirement. That's going to be tough going, but doable as long as employment and health remains as-is.
I have a decent works pension scheme that is based on career-average earnings. If I retire at 59 (the current plan) then that will get me about £20K per annum plus a lump sum of about £40K. I can play with these figures nearer the time by deferring and so on. So that gives me 9 years to get another £300K. Heavy going, but again do-able
There's a further £110K equity in my property, so I am hoping to release a chunk of that in the future (to purchase a property abroad).

ggb1979 wrote: »

assume a return of 5% per annum on whatever investments you have with no draw down (i.e. capital is preserved) = £500,000 in the bank

Thats pretty much what I am aiming for. Who knows what lies around the corner, but if you don't start then you definitely won't get there!

Ken68

Better surely to see how cheap you can live, and this site is perfect for that. You will make more money economising than you will ever from chasing interest rates.
Grow your own food, check out rainwater harvesting, change utilities for cashback often, plus rattle to death every board on this forum, etc. Mortgage free and no car helps. And if you're a pensioner they throw money at you lol