How much do you spend in retirement ?

Murphy_The_Cat

fred246 said:

The whole idea of business class is that you only do it because someone else is paying. It's not meant for retired people. It's nice but very poor value for money.

With respect, poppy !!!!!!.  The airlines don't discriminate against who travels BC.  As for poor value for money, that is like beauty and is in the eye of the beholder !

As a related aside, I look at the £50000+ motorhomes that are depreciating on peoples driveways and wonder about the sense in that, but all the motorhome owners I talk to absolutely love them and the (very expensive) lifestyle choice they've made.

Horses for courses etc etc.

fred246

Murphy_The_Cat said:

fred246 said:

The whole idea of business class is that you only do it because someone else is paying. It's not meant for retired people. It's nice but very poor value for money.

I look at the £50000+ motorhomes

You'd buy the slightly bigger version with the complimentary chocolates, slippers, pyjamas and dressing gown for £200K? Average business class seat is 4 times the price. That's why airlines love business class passengers. They pay a fortune extra for just a little extra space and a few freebies.

Murphy_The_Cat

fred246 said:

Murphy_The_Cat said:

fred246 said:

The whole idea of business class is that you only do it because someone else is paying. It's not meant for retired people. It's nice but very poor value for money.

I look at the £50000+ motorhomes

You'd buy the slightly bigger version with the complimentary chocolates, slippers, pyjamas and dressing gown for £200K? Average business class seat is 4 times the price. That's why airlines love business class passengers. They pay a fortune extra for just a little extra space and a few freebies.

I've already shown you/others that with a bit of effort and some extra time, it may be a very pleasant luxury that is the similar price of economy travel or a little bit more.

You don't want to hear that, or fly that way, absolutley fine, I can appreciate that.

It leaves more room for people who would like to !

Nebulous2

Murphy_The_Cat said:

fred246 said:

The whole idea of business class is that you only do it because someone else is paying. It's not meant for retired people. It's nice but very poor value for money.

As a related aside, I look at the £50000+ motorhomes that are depreciating on peoples driveways and wonder about the sense in that, but all the motorhome owners I talk to absolutely love them and the (very expensive) lifestyle choice they've made.

It only works if you use them. We’ve looked at them, prices, layouts etc and decided we get more room and more flexibility with a caravan and a decent towing vehicle. You also need to be very sure you like the lifestyle. I’m convinced there are a lot of people whose motorhome costs them over £1000 per night used. 

In contrast, when we bought our first caravan we did over 60 nights in it in the first year. It reduced slightly after that, but would still have been over 40 every year for the past 15 years. Post-retirement I’d expect that to be over 120. 

enthusiasticsaver

Jaco70 said:

Like many people I’m not sure how much income I’ll have when I retire, potentially in 18 years at 67, when my state pension kicks in. I have a few different streams that will hopefully look after my wife and I.

I was reading on ‘Which‘ that a luxury retirement, as they describe it, for a couple costs 42k pa. Presumably even without any N.I. to pay this still requires a gross income of about 50k.
It sounds a high figure, although I did feel that the amount set aside to cover holidays seemed very generous, and I wondered what actual retirees experiences are?
I realise that ‘how long is a piece of string’ is one answer, so please don’t bother offering this insight.
Thanks, J

This is a long thread now so apologies for not reading the whole thing and maybe repeating what others have said.  
I started planning our FIRE journey at around 48 although we had been investing in pensions since our early 20s but it was only once the mortgage went in our late 40s that we started to get to grips with exactly what income we needed in retirement and what income we were forecasted to have.  It was a moveable figure and eventually we retired at 58 although our state retirement age is 66 so there are all sorts of questions you need to ask rather than how much you spend. 

First the income side of things depends on spending habits mainly. We live comfortably on £34800 net annually (around £38500 gross) and are lucky that this is all met through DB pensions. When state pensions pay out this will increase by a further £17k although of course there will be tax to pay. Of that amount though we save around £12k to go towards holidays, house improvements and new cars. Some years are more expensive than others and on really big holidays/projects we dip into savings or investments. Our budget breaks down as approx. £4000 to cover essential spends like council tax, utilities and insurance and approx. £6000 on food and eating out/entertainment which is relatively high. We have around £5000 on personal spends between us which covers hair, clothes, hobbies. As we have two cars we spend around £3000 on running those, including fuel. We also gift money to our family in the region of around £3000. Each persons journey is different though according to circumstances so I would suggest you start a spending diary just to see what you actually do spend at the moment and obviously allow for the fact that spending habits may change in retirement.  We have more free time now so spend more  on entertainment, eating out, holidays and hobbies than we ever did while working. You also need to look at outgoings.  The less they are the more net income you have.  If things got tight we could go down to one car and we could stop with the gifts and reduce the holidays etc and having just put in a new kitchen and bathrooms we can get away with just decorating now. We also have a leisure club subscription which we use a lot but ups our outgoings. No debt or mortgage though. 

I would consider us to be at the luxury end of retirement in that we don't need to worry about money.  The £4000 on essential spends would not change unless we moved but all the other categories could be reduced or eliminated.  Initially we planned to retire at 60 but on checking the projected income we retired when we felt we had enough to continue with our current lifestyle while working plus extra money for holidays, entertainment and hobbies. Our income in retirement is actually not that much less than while working but we saved more when working and obviously paid more in tax and NI. 

Albermarle

Whilst I will maintain that, relative to my professional peer group, I have a pretty modest existence, it is nonetheless one that many (most?) would consider wildly extravagant. And yet at the same time I get a small thrill from being MSE in some ways. I haggle ruthlessly on holidays, phone contracts, broadband, TV and the like. I exploit TopCashback, credit cards and other rewards wherever possible, and a few years back I even played the 'bank switching' game for a bit of fun. 

I do not think being an active MSE, is necessarily related to the real need to do it.

Many people who do not really need to do it ( like you ) are very active, whilst many people who really should do it ( low income etc) do not do it .

It's more to do with your personality than anything else.

Sea_Shell

Albermarle said:

Whilst I will maintain that, relative to my professional peer group, I have a pretty modest existence, it is nonetheless one that many (most?) would consider wildly extravagant. And yet at the same time I get a small thrill from being MSE in some ways. I haggle ruthlessly on holidays, phone contracts, broadband, TV and the like. I exploit TopCashback, credit cards and other rewards wherever possible, and a few years back I even played the 'bank switching' game for a bit of fun. 

I do not think being an active MSE, is necessarily related to the real need to do it.

Many people who do not really need to do it ( like you ) are very active, whilst many people who really should do it ( low income etc) do not do it .

It's more to do with your personality than anything else.

True.   It's like being told you don't need to watch the pennies, you're well off....and not seeing that you're well off BECAUSE you've watched the pennies!!

By that time it's ingrained behaviour!!

Jaco70

enthusiasticsaver said:

Jaco70 said:

Like many people I’m not sure how much income I’ll have when I retire, potentially in 18 years at 67, when my state pension kicks in. I have a few different streams that will hopefully look after my wife and I.

I was reading on ‘Which‘ that a luxury retirement, as they describe it, for a couple costs 42k pa. Presumably even without any N.I. to pay this still requires a gross income of about 50k.
It sounds a high figure, although I did feel that the amount set aside to cover holidays seemed very generous, and I wondered what actual retirees experiences are?
I realise that ‘how long is a piece of string’ is one answer, so please don’t bother offering this insight.
Thanks, J

This is a long thread now so apologies for not reading the whole thing and maybe repeating what others have said.  
I started planning our FIRE journey at around 48 although we had been investing in pensions since our early 20s but it was only once the mortgage went in our late 40s that we started to get to grips with exactly what income we needed in retirement and what income we were forecasted to have.  It was a moveable figure and eventually we retired at 58 although our state retirement age is 66 so there are all sorts of questions you need to ask rather than how much you spend. 

First the income side of things depends on spending habits mainly. We live comfortably on £34800 net annually (around £38500 gross) and are lucky that this is all met through DB pensions. When state pensions pay out this will increase by a further £17k although of course there will be tax to pay. Of that amount though we save around £12k to go towards holidays, house improvements and new cars. Some years are more expensive than others and on really big holidays/projects we dip into savings or investments. Our budget breaks down as approx. £4000 to cover essential spends like council tax, utilities and insurance and approx. £6000 on food and eating out/entertainment which is relatively high. We have around £5000 on personal spends between us which covers hair, clothes, hobbies. As we have two cars we spend around £3000 on running those, including fuel. We also gift money to our family in the region of around £3000. Each persons journey is different though according to circumstances so I would suggest you start a spending diary just to see what you actually do spend at the moment and obviously allow for the fact that spending habits may change in retirement.  We have more free time now so spend more  on entertainment, eating out, holidays and hobbies than we ever did while working. You also need to look at outgoings.  The less they are the more net income you have.  If things got tight we could go down to one car and we could stop with the gifts and reduce the holidays etc and having just put in a new kitchen and bathrooms we can get away with just decorating now. We also have a leisure club subscription which we use a lot but ups our outgoings. No debt or mortgage though. 

I would consider us to be at the luxury end of retirement in that we don't need to worry about money.  The £4000 on essential spends would not change unless we moved but all the other categories could be reduced or eliminated.  Initially we planned to retire at 60 but on checking the projected income we retired when we felt we had enough to continue with our current lifestyle while working plus extra money for holidays, entertainment and hobbies. Our income in retirement is actually not that much less than while working but we saved more when working and obviously paid more in tax and NI. 

Thanks, that really interesting. So although you’ll eventually be on 55k gross, that’s in the future? You’re actually living a comfortable/luxury retirement on 38.5k? I’m certainly not suggesting that that figure in inconsiderable, it isn’t, but it sounds somewhat achievable. This wouldn’t be early like yourselves, but at 67 (when my wife would only be 57) and subject to paying off our 150k mortgage, fingers crossed. I’ve made peace with the fact that I’ll still have mortgages on other properties and that’s ok, it would take a considerable windfall to pay them off. They make a profit even with interest only mortgages though and my financial advisor advised against putting all my energy into paying them off, so it pretty much all goes into paying off our nice home, worth about 400k.
The detailed figures in your post are really helpful, and quite comforting. 👍

crv1963

Sea_Shell said:

Albermarle said:

Whilst I will maintain that, relative to my professional peer group, I have a pretty modest existence, it is nonetheless one that many (most?) would consider wildly extravagant. And yet at the same time I get a small thrill from being MSE in some ways. I haggle ruthlessly on holidays, phone contracts, broadband, TV and the like. I exploit TopCashback, credit cards and other rewards wherever possible, and a few years back I even played the 'bank switching' game for a bit of fun. 

I do not think being an active MSE, is necessarily related to the real need to do it.

Many people who do not really need to do it ( like you ) are very active, whilst many people who really should do it ( low income etc) do not do it .

It's more to do with your personality than anything else.

True.   It's like being told you don't need to watch the pennies, you're well off....and not seeing that you're well off BECAUSE you've watched the pennies!!

By that time it's ingrained behaviour!!

This struck a cord with me, so many colleagues take the attitude that as they are in relatively well paid roles and there is a lot of overtime available that they will spend plus run up loans and cc bills, they look incredulous when I say we'll both be retired by the time I'm 60! Some have told me that they don't expect to be able to retire but will need to service debt until they drop! 

We on the other hand do have some debt, but save hard as well for major home improvements/ cars/ retirement and although I can see some £300 plus boots/ clothes are nice I also ask are they needed? I think it is asking self- do I want satisfaction now or later? Set the goal and work towards it! One colleague has taken my advice and is nicely on her way to home ownership through changing her spending - she now saves her overtime and stopped internet shopping on shift! She gets her keys soon. 

Jaco70

Nebulous2 said:

There are lots of compromises to be made to get where you want to be in retirement. My one is time versus money. We are in the middle of a convoluted downsizing by buying a second home plan. We’ve had it for almost 2 years now, but haven’t been able to visit for 3 months due to Coronavirus. The doing it up to the standard we want to retire to plan hasn’t progressed in the way it should have either. It’s far too easy to go there for a weekend, open a couple of beers and walk the dogs, because it is quite liveable the way it is. 

With 9 years to go to state pension age I could stop now with a pension of about £24k.  By selling our main home I could add £10k a year to that until state pension age and still have a cushion left. By hanging on a year I would add £4K to that, half from additional pension and half from drawing more from our capital. Waiting until state pension age would have me retire on more money than I’m currently earning. 

Lifestyle plans don’t include many long haul flights. We get a lot of enjoyment from caravanning and cycling. Spending the summer here and most of the winter touring the continent in a caravan would be the plan. That doesn’t cost a huge amount. It does require a degree of fitness however and who knows how long that will last? I’ve holidayed a lot in France and spoken to a lot of people who tour in motor homes. It suddenly struck me last year. It’s very rare to meet anyone who has been doing that for more than 10 years. Lots of people who have been doing it for 6, 7, 8 years, but very few for more than 10. So it has a limited life, depending on health and confidence. Which makes the question all the more important; when do I pull the trigger? 

I just wanted to give my opinion on motorhomes. I get why they’re a bucket list luxury and I can see why they’re so attractive. However the prices are eye watering and I would recommend considering touring caravans as a more practical solution. We had a caravan when the kids were small, got rid of it when it fell apart, and as my parents had bought a holiday home by then it seemed unnecessary to replace it. If you’re happy with towing, which I was, you can own a very nice car and very nice van for the price of a motorhome and when you reach your destination just unhitch and you have the car to explore with. Tight little fishing villages or busy towns are much more practical in a car than a huge motorhome. I think it’s just that people don’t aspire to owning a van, yet it’s a very good option (as long as towing doesn't bother you).