How much do you spend in retirement ?

zagfles

ratechaser said:

Health costs can to an extent be insured against (although of course that insurance itself can be costly). We've already got 'home help' in the sense of a cleaner and a window cleaner (although we're between gardeners right now), so some of that is also already factored in. If I look around at our little neighbourhood, we are the youngest by some margin, and our 'more senior' neighbours all appear to be coping well with big houses and gardens - there's even a rota for putting out the recycling bins and mowing the grass on the green in the middle our cul de sac... so I hope to be in the same position 30-40 years from now!

Zagfles - coming back on your points on travel economies.... yes I'm well aware of the options there, learnt a lot from FlyerTalk. But the reality is that while we currently go in peak times because of the children, that has to a certain extent been offset by staying in slightly less 'classy' places than I'd have chosen if it was just the 2 of us. Plus far too much travelling economy/premium economy... and we're already pretty active when we go places, not really a 'lying on the beach' family, although I don't mind the odd week of AI in the Caribbean... So although the MSE in me will be looking for good deals on J class travel (wife isn't going to buy into tricks like ex-EU or convoluted indirect routings so that's out), and nicer hotels, it's likely to net off versus the relatively cheap and cheerful family holidays we have right now. And I haggle hard when booking them, believe me!

Plus the kids have got wise to the fact that mum and dad pay for nice holidays and have suggested they'll be happy to tag along for some years yet 

Yes, I'm with your wife, the travel board is full of people coming up with weird convoluted routes to get cheaper BC flights!

But we could be almost talking history here, things could be radically different going forwards. Travel economics are really hard to call at the moment - I suspect flight prices will increase a lot as some airlines will go bust reducing competition, and especially if they have to socially distance on planes. Package prices too with the massive losses tour operators have taken and no doubt having to contribute much more towards ABTA, ATOL etc going forwards.

We do a lot of driving holidays, usually the main family holiday if in Europe, we were already thinking of doing more of those since driving holidays need time and that's what we'll have plenty of in retirement. So they might be a form of travel that doesn't end up costing too much more, particularly if the oil price stays low.

Personally I want to do my own version of the Mongol Rally, but wife isn't so keen!

barnstar2077

Bravepants said:

For my retirement, I plan to live on my current take home pay minus what I currently save toward my retirement, adjusted for inflation (CPI).

Can't really fault the logic here.  With the addition of a savings account for emergency one off big payments (that is then topped up from your monthly drawdown) this plan looks pretty robust.  I plan on pretty much doing the same thing.

barnstar2077

I feel obligated to chip in to represent the lower end of the budget!  :  )

I could quite happily retire today on 12k a year.  Assuming I have a few thousand in a an emergency fund and that the 12k was adjusted for inflation annually.

All my bills, including food shopping, only comes to £450 a month.  I don't drive, and my mortgage cost is peanuts since I greatly increased the term.

So my plan is to retire at 55 and to pay myself whatever the personal allowance is for that year is (currently at £12,500.)

Anything more than that will probably go to friends and family who are either just starting out or who have not been as fortunate as myself.

To me retirement is just not working and having time to do what I enjoy most.  Which is picturesque walks, inexpensive lunches with friends and family, and the pursuit of cheap hobbies (cycling, gaming, museums and galleries etc.)

Edit:  Having just checked, the personal allowance was only £6475 in 2010, so it would seem unlikely that I will need the full personal allowance to live on in twelve years time when I plan to retire.  Even adjusting for inflation my bills will definitely not have doubled by then!

Linton

At the higher end and to see how plans can work out in practice:

I retired at 56 in 2005 on the basis of an average £37K (£52K at current prices) annual expenditure based on maintaing the then current standard of living with some added on for major one-offs and running a narrowboat.  The plan was based on pessimistic assumptions of 3% inflation and 4% investment growth.

WIth an unplanned addition to the pot, investment far more lucrative and inflation much lower then planned, and the benefit from deferring my pre-2016 SP, the plans now permit an average expenditure of about £67K/year.  We could not spend that amount on day-to-day living as we could buy anything we wanted on the original budget.  Our wants are not extravagant, Morrisons/Tesco with a top up from Waitrose rather than Fortnum & Masons.  So the excess money is being spent on long haul holidays every 2 years.

barnstar2077

Linton said:

At the higher end and to see how plans can work out in practice:

I retired at 56 in 2005 on the basis of an average £37K (£52K at current prices) annual expenditure based on maintaing the then current standard of living with some added on for major one-offs and running a narrowboat.  The plan was based on pessimistic assumptions of 3% inflation and 4% investment growth.

WIth an unplanned addition to the pot, investment far more lucrative and inflation much lower then planned, and the benefit from deferring my pre-2016 SP, the plans now permit an average expenditure of about £67K/year.  We could not spend that amount on day-to-day living as we could buy anything we wanted on the original budget.  Our wants are not extravagant, Morrisons/Tesco with a top up from Waitrose rather than Fortnum & Masons.  So the excess money is being spent on long haul holidays every 2 years.

You have done very well, it must feel good to have all of your plans come together.  I have put growth down as 3% on my spreadsheet and inflation as 2% (as that is the UK's target.)   Hope for the best and plan for the worst as they say.

Jaco70

Linton said:

At the higher end and to see how plans can work out in practice:

I retired at 56 in 2005 on the basis of an average £37K (£52K at current prices) annual expenditure based on maintaing the then current standard of living with some added on for major one-offs and running a narrowboat.  The plan was based on pessimistic assumptions of 3% inflation and 4% investment growth.

WIth an unplanned addition to the pot, investment far more lucrative and inflation much lower then planned, and the benefit from deferring my pre-2016 SP, the plans now permit an average expenditure of about £67K/year.  We could not spend that amount on day-to-day living as we could buy anything we wanted on the original budget.  Our wants are not extravagant, Morrisons/Tesco with a top up from Waitrose rather than Fortnum & Masons.  So the excess money is being spent on long haul holidays every 2 years.

Thanks, these postings regarding actual situations are the most interesting ones. 67k sounds very high, much more than I will achieve, and I would guess puts you in the top few percent of retiree incomes. With others living happily on incomes in the 12 to 20k bracket it sounds as though retirement works out well for most and people just adjust life to suit, rather than it being a struggle.
I don’t know how much my parents live on but I suspect they accumulate rather than eat into their pot. They’re healthy for their age (78) but enjoy being home, or occasionally visiting their holiday home, rather than travelling the world. I have in laws who are also retired, but are early 60s and they’re ticking places off the atlas at an alarming rate, which I imagine does eat up funds.
I was only fully off work for four weeks at the start of lockdown, and obviously these are peculiar times with pubs and restaurants being closed, but I could see how little I was spending and how I didn’t miss things nearly as much as I’d expected to. 

zagfles

barnstar2077 said:

I feel obligated to chip in to represent the lower end of the budget!  :  )

I could quite happily retire today on 12k a year.  Assuming I have a few thousand in a an emergency fund and that the 12k was adjusted for inflation annually.

All my bills, including food shopping, only comes to £450 a month.  I don't drive, and my mortgage cost is peanuts since I greatly increased the term.

So my plan is to retire at 55 and to pay myself whatever the personal allowance is for that year is (currently at £12,500.)

Anything more than that will probably go to friends and family who are either just starting out or who have not been as fortunate as myself.

To me retirement is just not working and having time to do what I enjoy most.  Which is picturesque walks, inexpensive lunches with friends and family, and the pursuit of cheap hobbies (cycling, gaming, museums and galleries etc.)

Edit:  Having just checked, the personal allowance was only £6475 in 2010, so it would seem unlikely that I will need the full personal allowance to live on in twelve years time when I plan to retire.  Even adjusting for inflation my bills will definitely not have doubled by then!

I wouldn't assume the personal allowance will increase at the same rate, the increases over the last 10 years were a coalition policy to implement big above inflation rises to it to take lower income people out of tax. That's unlikely to continue, more likely it'll be frozen, with the massive COVID bill the govt will have they'll have to raise taxes somewhere.

zagfles

Jaco70 said:

Linton said:

At the higher end and to see how plans can work out in practice:

I retired at 56 in 2005 on the basis of an average £37K (£52K at current prices) annual expenditure based on maintaing the then current standard of living with some added on for major one-offs and running a narrowboat.  The plan was based on pessimistic assumptions of 3% inflation and 4% investment growth.

WIth an unplanned addition to the pot, investment far more lucrative and inflation much lower then planned, and the benefit from deferring my pre-2016 SP, the plans now permit an average expenditure of about £67K/year.  We could not spend that amount on day-to-day living as we could buy anything we wanted on the original budget.  Our wants are not extravagant, Morrisons/Tesco with a top up from Waitrose rather than Fortnum & Masons.  So the excess money is being spent on long haul holidays every 2 years.

Thanks, these postings regarding actual situations are the most interesting ones. 67k sounds very high, much more than I will achieve, and I would guess puts you in the top few percent of retiree incomes. With others living happily on incomes in the 12 to 20k bracket it sounds as though retirement works out well for most and people just adjust life to suit, rather than it being a struggle.
I don’t know how much my parents live on but I suspect they accumulate rather than eat into their pot. They’re healthy for their age (78) but enjoy being home, or occasionally visiting their holiday home, rather than travelling the world. I have in laws who are also retired, but are early 60s and they’re ticking places off the atlas at an alarming rate, which I imagine does eat up funds.
I was only fully off work for four weeks at the start of lockdown, and obviously these are peculiar times with pubs and restaurants being closed, but I could see how little I was spending and how I didn’t miss things nearly as much as I’d expected to. 

Bear in mind it seems some people are talking about income for a couple and perhaps even kids, and others for a single person. SIgnificant differences nonetheless. When the kids were here full time a few years ago we were spending about £30-35k a year (ex mortgage) ie less than £10k per person, and that included lots of travel. Now we're spending about the same, including supporting the kids partially (at uni), with travel ramped up a bit, 4-6 foreign holidays a year rather than 2-3.

So less support for the kids paid for more holidays! But £12k each would easily be enough if we didn't travel so much.

Albermarle

I wouldn't assume the personal allowance will increase at the same rate,

In fact it did not increase at all from 19/20 to this tax year.

Murphy_The_Cat

zagfles said:

ratechaser said:

Zagfles - coming back on your points on travel economies....  So although the MSE in me will be looking for good deals on J class travel (wife isn't going to buy into tricks like ex-EU or convoluted indirect routings so that's out), and nicer hotels, it's likely to net off versus the relatively cheap and cheerful family holidays we have right now. And I haggle hard when booking them, believe me!

Plus the kids have got wise to the fact that mum and dad pay for nice holidays and have suggested they'll be happy to tag along for some years yet 

Yes, I'm with your wife, the travel board is full of people coming up with weird convoluted routes to get cheaper BC flights!

If you are ever able to change your respective minds, flying ex-eu is a wonderful way to ease the pressure on your wallet, whilst
flying on a flatbed, enjoying a good meal - the positioning flight pre and post holiday is all part of the trip !