How much to live on

in_spired2

Hi... Have been lurking in this thread for a couple of months now

Well, I figure if my current rent/CT/lec/gas/h2o/phone/bb/groceries/clothes/hair/xmas spend is 12,971 a year, and current state pension is 9627*, previous work pension 1000, current work pension 1500ish (plus a lump sum which I have no idea of the amount but currently "not much" I expect), I only need another 842 a year to "exist" at today's prices when I retire (10 years). Current savings/investments almost cover that without future earned interest for about 25-30 years.  anything else I can put away between now and then means non-bills money in the future (and hoping I don't have to replace too many appliances or expensive items like beds and sofas in retirement).  I don't have a car/travel/eat out/holidays etc.  I don't expect to have my pets then (my dogs are almost in their teens).

* assuming I get it all, but I've not been able to get a forecast as I don't have a passport so can't prove my identity on their (gov.uk) digi-identity thingie.  I need to contact them and get it sorted out.

I worked in my teens and spent it all (and certainly no provision for pensions back then or thoughts of retirement/personal finances) ... spent too long on benefits at home, single, bringing up the kids with no help from their dad and studying (degree) and have worked full time for the last 12 years.  Jealous of my friends who are already retired/retiring but they worked while I was on benefits... so...it is what it is ...I believe my student loan repayments stop when I'm 65... I'll enjoy that but would like to earn enough that I've paid it off before then lol

Wish I'd known what I know now, when I was younger, but even if I went back in time to have words, I'd have ignored me as I was busy living in the moment having fun.

I'd not say that I've been thinking much about retirement lately, but I do have around 2200 days left of commuting (haven't counted my generous-but-wish-it-was-more annual leave) before I can claim state pension

Anyway... I was really really worried a few months ago.... but I don't really need a lot to live on (would be a lot less if I'd bought a house and didn't rent but hey ho) so as long as I can keep working and saving and hope that the cost of living settles down I'll be fine.  If I had a retirement income "now" at £15k a year I'd think of myself as living very comfortably so that's what I'm aiming for (more would be better of course)

MovingForwards

@in_spired2 your figures look ok, but do a benefit check and pretend you're currently old enough to be retired. As you're in a rental you may have help towards it and other things. It will take a little pressure off and reduce your worries.

[Deleted User]

In_spired2. Are you able to give a little more information to make it easier for us to comment? What is the retirement income you are expecting at 67 that includes your occupational and state pensions? How old are you now? What are the savings and investments you mention? You say they could cover your expenses for 25 or so years. If they are that substantial why not buy a property? I also see you are saving for a house deposit. What do you intend to do with that as you mention that you will continue to rent. 

Thanks for your post but I am a bit confused about your actual financial position and what you are trying to achieve. Best wishes.

PennyForThem_2

In_spired2 - if you can get a state pension forecast - make sure you have been attributed the years you were getting child benefit even if you weren't working.  You should get credits towards SP.
https://www.gov.uk/child-benefit/what-youll-get

[Deleted User]

Good morning. Just a little update from me. I may not be moving to full retirement after all for a few more months. I have been asked to cover two very nice exam groups until Christmas. It is a real struggle to get staff at the moment and one member of the small department is now on long term illness leave. We are talking about 18 hours a fortnight so not too exhausting! They have also agreed days off for the family wedding. Fortunately the October cruise is during half term. Being a rare commodity can sometimes pay!

The cash withdrawal from from S&S ISA came through yesterday. I put some into a 3 year fixed Bond which had a decent rate and some into my loyalty saver. I also decided to keep the ISA open after all and put in a lump sum yesterday and changed to a slightly more risky fund. The amount is fairly small and I will see how it goes before adding to the amount. In the end I didn’t just want to have everything in cash.

I also opened another regular saver that had a rate of 2.5%. You can only pay in 50 a month for a year but that will be my spending money for the September 2023 cruise. The other regular saver which matures next May will pay for that cruise and the spending money for holiday to Cyprus next May.
The 3 year fixed bond can be used to pay for a decent holiday in 2025! 

I had an eye test this week and paid a supplement for extra screening. Results were fine and I was pleased I paid for the extra tests. I got a good deal on the glasses too. In fact very good indeed. I bought two pairs, one designer and one cheaper pair. Both are to be fitted with good quality varifocal lenses plus insurance. All the testing, glasses, insurance and lenses came to 830 but after the buy one get second half price offer, plus over 60s discount and another offer I only paid 417. Very please with this as I had budgeted 500 and didn’t think I would get two pairs for that price ! I was told by the optical assistant that lens price have come down. I also got a few pounds worth of points on my advantage card too!

My cosmetic dental work will be completed in July and is also coming in under budget which is pleasing. I also plan to buy some clothes and sort out my current wardrobe over the next month or so. By August the upgraded me will emerge. I intend to be a dapper man in my 60s  !

Other expenses for the remainder of the year include paying for the October cruise, attending a family wedding in London ( clothes, hotel stay, travel and wedding present) plus Christmas. Hopefully all should stay within budget!

Best wishes.

in_spired2

Thanks for noticing and commenting folks.  To clarify.

1... ooops ...I thought I'd changed my signature some time ago.  I've given up on buying a house as I live in a really expensive area so what I was saving as a deposit is now my retirement pot (and includes my emergency fund).  I'm in social housing and am taking an interest in the proposal to give the right to buy to HA tenants.  Even with a massive discount I likely couldn't afford it but never say never... I'll see what the future brings.  I may be happy to move somewhere cheaper when I retire.

2... I am 57 and expecting state pension plus my 2 work pensions mentioned when I retire at 67 (or no later than 70, health and finances permitting).  I don't know how much the current work pension will be worth then.  (I find it very difficult to understand the annual figures they send and in the last year I've switched to a USS pension where about 11% of my £27k-ish salary is taken and matched by about 20% from employer? whereas on the previous scheme I think it was 3% from me and 6 or 11% from employer).  When I said my current savings would cover expenses... I mean along with the pensions - simply making up the shortfall between income and bills.

3... I currently have enough income to pay the bills and to save for the future. in addition to my ballpark £13k annual essential expenses (including xmas/birthdays), I also put a bit away each month for pet expenses, dentist, tv licence (the annual/unpredictable costs)

4... Around 3/4 of my savings are in savings accounts - Iike regular savers, limited withdrawals, plus an instant access account to avoid penalties in an emergency.  The rest is in Vanguard S&S Isa which I opened in Feb/Mar this year. - I put £230 a month in there. In total I'm putting around £650 into the various accounts.  This is how much I need to save to add to my current savings to reach my target of £100k.  Ignoring growth with interest (and assuming the S&S will start going up instead of down at some point in the next 10 years!) this gives me at least £3.3k a year over 30 years (the ladies in my family are generally long lived - maybe I'll be that lucky)  In current numbers the pensions and savings give me enough to live on and have a bit over and avoid any need for relying on benefits.  I really want to be self-sufficient but also able to "live" rather than just "survive (pay the bills)".

5... Any increases I get in disposable income, I'll likely put half towards retirement and keep the other half for fun-spends as I've been living probably too frugally over the last few years.

6... As I get nearer to 2032 I'll have a better idea of what I have and what I need each year.  It would be really nice if I could retire before 67 or at least go part-time for a few years.

[Deleted User]

in_spired2  Many thanks for your detailed response. I think it would be a good idea to find out what your current pensions would be worth at ages 60  through to 67. You need to contact the administrators of the schemes. You should be receiving annual updates in any case. That knowledge could help you work out a retirement plan at different ages. For example they may allow you to work part-time after the age of 60. 

Although £100000 sounds a great deal to supplement your income over say 30 years it is somewhat risky when you take inflation into account. In addition do you really only want to use it for expenses and day to day living? During retirement you also need give yourself a few treats and occasional holidays.

The S&S ISA is a good idea. I winder if you should start a personal pension plan as you can gain tax relief on that. Just an idea. Perhaps ask on the main Pensions board.

Having to pay rent throughout your retirement on an income of £13000 to £15000 a year could be tough. Although of course if the pensions are index linked that will help.

Perhaps allocate savings to three different purposes. For example emergency fund, day to day retirement expenses and holidays and treats.

These are just my ideas and not advice in any shape or form.

Your starting point though must be to get some idea of what your actual income will various points between the ages of 60 and 67.

Best wishes.

OceanView

Really enjoyed reading this thread, great to hear other people’s stories and ideas, thank you everyone, especially Baron Dale. In an effort to keep it alive want to throw our figures in.

Our current spend is around £2250 pm and we are hoping that with the mortgage paid off (£480 per month) our spend in semi retirement in 3 years time (both will be age 57) to be £2000 allowing for a little for inflation 

By 2025 our dc pension pots will hopefully be around 75k + 75k + 20k which I know isn’t anywhere near some of the numbers on the pension board but hey that’s what we have, we also have around 100k s&s isa. My wife wants to work part time until around 62 and would be able to stay with her current employer, her income will be around 12k to 13k pa when PT. I would like leave my current job as I hate it and the corporate BS that goes with it, I can feel myself turning into a Basil Fawlty type character struggling to deal with the public as I get older, I would work part time but have absolutely no idea what I would like to do or indeed if anyone would want to employ me this is causing me a bit of a headache too be honest. Need some inspiration!

We have checked pension forecasts and we will both qualify for full SP in 2035

Tried to future proof the house over last few years with new roof, windows, kitchen, bathrooms, gates, flooring, boiler and rads  etc to minimise spend later on

The only other thing to mention is that at some point in the future we will need to trade down to a smaller property as our current house and garden will be too much work and the council tax is quite high, we estimate this will release about 250k equity after buying a smaller house or bungalow, this would be in 6 to 8 years time around 2030. Ideally somewhere by the sea.

 

Im not the best with numbers it takes me a while to get my head around them, but we should have enough to get by from 2025 until 2030 with some PT income, then to not work from 2030 onwards and have sufficient funds until SP kicks in in 2035 

Sadly we have lost a few friends to various illnesses in recent years and desperately want to make the most our time left while we are healthy enough to do so, even if that means having to watch the budget a little now

Thanks all, best wishes

Kim1965

If you get a part time job and use up yiur tax allowance you will take home 2k a month. Safe investment return on 270k would be 10k pa. 
 I think your modest lifestyle will be very easily supported on what you have. Start the countdown and relax. 

Kim1965

OceanView said:

Really enjoyed reading this thread, great to hear other people’s stories and ideas, thank you everyone, especially Baron Dale. In an effort to keep it alive want to throw our figures in.

Our current spend is around £2250 pm and we are hoping that with the mortgage paid off (£480 per month) our spend in semi retirement in 3 years time (both will be age 57) to be £2000 allowing for a little for inflation 

By 2025 our dc pension pots will hopefully be around 75k + 75k + 20k which I know isn’t anywhere near some of the numbers on the pension board but hey that’s what we have, we also have around 100k s&s isa. My wife wants to work part time until around 62 and would be able to stay with her current employer, her income will be around 12k to 13k pa when PT. I would like leave my current job as I hate it and the corporate BS that goes with it, I can feel myself turning into a Basil Fawlty type character struggling to deal with the public as I get older, I would work part time but have absolutely no idea what I would like to do or indeed if anyone would want to employ me this is causing me a bit of a headache too be honest. Need some inspiration!

We have checked pension forecasts and we will both qualify for full SP in 2035

Tried to future proof the house over last few years with new roof, windows, kitchen, bathrooms, gates, flooring, boiler and rads  etc to minimise spend later on

The only other thing to mention is that at some point in the future we will need to trade down to a smaller property as our current house and garden will be too much work and the council tax is quite high, we estimate this will release about 250k equity after buying a smaller house or bungalow, this would be in 6 to 8 years time around 2030. Ideally somewhere by the sea.

 

Im not the best with numbers it takes me a while to get my head around them, but we should have enough to get by from 2025 until 2030 with some PT income, then to not work from 2030 onwards and have sufficient funds until SP kicks in in 2035 

Sadly we have lost a few friends to various illnesses in recent years and desperately want to make the most our time left while we are healthy enough to do so, even if that means having to watch the budget a little now

Thanks all, best wishes

One question, have you already qualified for full state pension or do you need more years?? Only ask because you may not pay enough ni going forward in part time work to
 gain any more qualifying years.