How much do you really need to live on in retirement?

Bill_M_1238

Hi all,

Thought this section may be better to ask the question rather than in the pensions area. Have read through many of the 'what's your number' threads in the pensions area and it is full of posters claiming pension pots of £600,000/700,000 needed to fund retirement, or claiming £40,000 needed to be comfortable.

Is this really the case? I'm mid 40s but still pay mortgage and have children so like most people my age have very limited funds. Both my wife and I do pay what we can to our pension but I really don't think I will ever come close to £700,000 pot or £40K pension.

Question Is, what's a realistic amount for a couple to have a comfortable retirement?

And a second question regarding travel in retirement, we are still at the £2,000 for 7 - 10 days in the sun stage as need to travel in peak school holidays. Ridiculous prices I know, but very limited due to time we can get off work and having kids at school.

So, for those lucky enough to be able to travel outside of peak times, how far does your £ get you. What's an average budget for travel in retirement?

Any thoughts or insights would be appreciated.

BM

Pollycat

Bill_M_1238 wrote: »

Hi all,

Thought this section may be better to ask the question rather than in the pensions area. Have read through many of the 'what's your number' threads in the pensions area and it is full of posters claiming pension pots of £600,000/700,000 needed to fund retirement, or claiming £40,000 needed to be comfortable.

Is this really the case? I'm mid 40s but still pay mortgage and have children so like most people my age have very limited funds. Both my wife and I do pay what we can to our pension but I really don't think I will ever come close to £700,000 pot or £40K pension.

Question Is, what's a realistic amount for a couple to have a comfortable retirement?

And a second question regarding travel in retirement, we are still at the £2,000 for 7 - 10 days in the sun stage as need to travel in peak school holidays. Ridiculous prices I know, but very limited due to time we can get off work and having kids at school.

So, for those lucky enough to be able to travel outside of peak times, how far does your £ get you. What's an average budget for travel in retirement?

Any thoughts or insights would be appreciated.

BM

There really is "no answer fits all."

I've been (early) retired for 15 years, OH for 12 years.
We both have occupational pensions, substantial savings and my state pension has just kicked in.
We have at least 3 holidays a year, sometimes 4.
This year 2 x 2 weeks to Greece plus 3 weeks in Bali.

Our self-catering Greek holidays cost us less than £1k for flights, accommodation, transfers, luggage and we spend another £1k on eating out.
We eat out twice a day and do not stint ourselves. I do not cook anything. I don't even make a cup of coffee, so obviously it can be done much cheaper.
Currently, you can pick up a last minute holiday pretty cheap but as more travel agents go under (Monarch for example), there will be less choice so that option may not exist in the 20 to 25 years to your retirement.

Bali costs are approx £1k flights, slightly less for accommodation.

lessonlearned

How long is a piece of string...:rotfl:

Like Polly says it can vary so much. Living costs, whether or not you will have a mortgage or rent.....your hobbies, interests etc.

I think a lot of people are often pleasantly surprised because it's easy to forget that working has its own expenses.....travel, special clothing, convenience foods, guilt presents etc. All add up.

Travel......definitely savings to be made there. I am a widow so sometimes have to pay s single supplement but with a bit of shopping around there are usually plenty of bargains to be had.

Have You ever read a blog by a guy called mrMoneymoustache, he retired at 30. Very interesting reading.

There are lots of FIRE blogs......Financial Independence Retire Early - loads of ideas and help to help you prepare.

By most standards I have quite a modest income but I actually live very well.

Ilona

I am a bit of an oddball, never planned for my retirement, I always knew I would manage, whatever pension I got. I cut down on my working hours when I was in my mid fifties, which reduced my income. I learnt to live on a small income. When I finally retired at 60 my bank balance was virtually nil though I still had a mortgage. I was able to pay it off early from my pension due to my frugal ways.

I get £180 a week from the government, and £20 a week from a small private pension. This is plenty for me to live on. I am still able to save for a newer car, go on holidays, and do pretty much everything I want to do. I have a brilliant life.

Op, it's all down to priorities, deciding what is important to you. No one can tell you what to spend your money on, if you want the latest this and that, you pay for it. Me, I'm happy and content with second hand. I'll say one thing though, I find that having a small income is ok by me, I don't feel deprived of anything. I would be worrying if I had money stashed away somewhere. Is it safe, will I lose it? Nope, I have no worries in that department.

Take a look at your present lifestyle, do you want to maintain the same standards, what are your priorities, do you know the difference between needs and wants? Then work out if you need to make any changes according to the money you have available.

ilona

MrAPJI

Bill, just a thought, but if your pension pot doesn't grow as much as you might hope, would 'downsizing' be a possible solution in the future or maybe moving to a 'cheaper' part of the country to release funds.

badmemory

Do remember though, that as the cost of many things go down in retirement incl shopping as it is easier to shop around, some things will go up. Heating costs go up, initially because you are often at home longer & later because the bones get older. Sitting under a blanket to keep warm may sound like a good idea but it is bad for your mobility.


Are all the things you want to do in a normal day going to be free? Whilst they may be cheaper in the daytime, such as the gym, but what else do you want to do with your time?


This will sound like a long time in the future for you but the better you plan the longer that "future" future is going to be. After all we don't want any pension provider to make a profit out of us do we?

ibizafan_2

We probably have a similar situation to Pollycat. We have substantial savings and investments and a combined pension income of circa £43,000 gross. However, we live in a small house, so have downsized anyway. We run two cars but they are nine and ten years old. We have spent money recently on renewing the kitchen and bathroom and don’t envisage doing it again. What we spend most of our spare money on is travel while we are still in our mid sixties and fit. We go on holiday several times a year including long haul destinations to see parts of the world that interest us, including Canada and Alaska next month. One son and my grandchildren live in Australia so I go there every year. What I’m trying to say is that it’s horses for courses. Many people aren’t remotely interested in travel, particularly long haul. I see pensioners with brand new cars every couple of years. We would see that as a waste of money but they obviously don’t. I think I am very lucky financially, but as I am a contented type of person anyway, if I had to manage on much less, I would do so. I love a bargain, so I would enjoy the challenge.

crv1963

Hi Bill,


I think it all depends on your planned retirement lifestyle, your current lifestyle and what you can realistically put away. It also depends on what type of pension you are saving into and when you plan on taking it.


On the Pensions Board there are some eye wateringly large numbers banded around, but a lot of people can and do have smaller pots. You cut your cloth to what you have. In my work I see lots of people with only SP to look to in old age, and others with portfolios that make me think - why don't you retire now?


We're aiming to be progressive. I have a DB which I could take this year but the income would be too small for us to have a decent lifestyle (for us) so will delay taking it, increasing its' benefits to us and save more into Mrs CRV very much smaller pot. Our aim is to try for 24-30k pa after tax, working out that without mortgage we can live comfortably on that. When SP kick in (12 years for me, 15 years for wife) if we're still able we'll probably then try to help our heirs a bit (my sons and her(our) nieces).


When we do retire (hopefully before age 60 for me) we intend to draw down Mrs CRV pension within her annual tax allowance, saving some of it but travelling several long haul trips as being retired the plan is spend a couple months away, exploring properly new places. Our niece and her boyfriend had 6 months back packing in SE Asia a couple of years ago- we're going to have our GAP Year(s) at the end not the beginning of our careers!


Edit- If push came to shove we worked out 18k pa is the minimum we need to cover our bills and lifestyle if we stuck to the odd EU holiday a couple of times a year. Remember allegedly as you age your spending goes down, so theoretically you can front load your retirement spending as long as you always keep enough to fund your spending as you don't know the end date. For us if (as is probable) I go first, Mrs CRV could manage on survivor pension and SP, for me I could manage on DB and SP if she goes first. Mrs CRV pension pot being run down from age 57-67(when her SP kicks in).


I know that there is lots of posts about the size of emergency funds/ care home fees and the like, we aim to have a pot for some of this but not a huge amount, also if there is a crash in the markets we'd have to trim travel if she is in drawdown.

Bill_M_1238

Thanks all for your input.

I'm fairly confident we will be comfortable in retirement. Between my wife and I we will have £22K ish of DB pensions (although my wife's pension may lose a few thousand if she retires at 60). Plus state pension of course so another 17K or so based on today's figures, so probably between 35 and 37K if we both retire at 60. I'll also have DC pot with 20 years by the time I get to 60 and looking to retire. Not so shabby if you take the state pension into account, I suppose. Should be able to cover period until state pension kicks in through cash savings and DB lump sums.

Big expenses for us will be travel. My wife loves to travel and is looking to travel extensively in retirement. I was lucky and travelled a lot in my younger days, so would love to see how some of the places have changed over the years. Will also be good to see some of the places again through a different perspective, 30+ years older (although maybe not so much wiser..)

Ideally will keep a small base in the UK for the summer and look to travel during the winter months when not so expensive and when weather not so good back home.. if our Pensions can cover the basics back home, will be happy to spend our DC pot on travel whilst we can.

Once again thanks all for your thoughts, and for now will concentrate on upping my contributions over the coming years to maximise our DC pot (or travel fund as it will be known)

crv1963

People seem to be keen to dismiss the SP but IMHO I think it's good value, pension and healthcare for 11% of your wage. Index linked- ok goal posts keep changing and not a vast amount to live on if it's your only income, but as a set amount that is going to keep coming it has to form part of anyone's planning.

Murphybear

This is a "how long a piece of string" question. We have been retired for 10 years. Our joint income is about £1900 pcm.

This is more than adequate for our lifestyle. We run 2 old cars and don't go on a lot of holidays. I did a lot of gallivanting in my 30s and due to health issues don't really want to travel too far. We live in a lovely part of the country where there are many beautiful things to see/visit.

We eat out quite a lot and can afford to shop in Waitrose