How much to live on

[Deleted User]

Humdinger1 said:

@[Deleted User] thanks for starting this thread and thanks too to all who have contributed ! I have read it all and subscribed.   It has really provoked some hard thinking and simultaneously reassured me.  I will post in more detail soon.  Onwards and upwards Humdinger 

    To be fair Scottish_Lassy started the thread. Very pleased you find it useful.

Frugaliza

I've also got a lot of value out of this thread so thanks for keeping it going @[Deleted User].  It's focussed my mind on what I need/want in retirement, which I'm hoping will happen at some point between July 24 and July 26  (age 58-60).  The earlier date is time optimum but the later date is income optimum.  I keep staring at my spreadsheet wondering what to do and how long I can cope!

[Deleted User]

Frugaliza are you able to share potential income and expenditure plans or estimates. Could be useful to others or even prompt suggestions from others to yourself. Have you checked your state pension forecasts? Best wishes.

Humdinger1

Thanks @Scottish_Lassy and everyone contributing

Frugaliza

Frugaliza are you able to share potential income and expenditure plans or estimates. Could be useful to others or even prompt suggestions from others to yourself. Have you checked your state pension forecasts? Best wishes

Happy to share my figures so far @[Deleted User] 

 I've checked state pension forecast which advises 

Estimate based on your National Insurance record up to 5 April 2022 - £167.20/week.  Forecast if you contribute another 4 years before 5 April 2033 -  £185.15 a week

I've added up all my expenses and average (frugal) spending money and I think I need approximately £2000 per month to keep my current standard of living.  I have a CS defined benefit pension (mix of Classic and Alpha) and understand that my pension could yield that amount after tax by August 2024.   If I work another 2 years after that though I could net an extra £400 per month.  That's quite a jump given  it is for the rest of my life so those golden handcuffs could keep me working.  It would be nice to have some give in the system and I'm conscious of the need to buy in care in later life as my mum (soon to be 89) is now having to do on quite a small monthly sum. 

The other issue I wonder about is how big a nest egg/rainy day fund is it prudent to aim for to cover big one offs and emergencies that might crop up in the future?   People talk of 3-6 months income for an emergency fund - but the pension is guaranteed income so that  measure doesn't seem relevant.   

To give context I'm single (no intention of changing this status!) a DS and DD of 21 and 19 who who've flown the nest now (DD returns from uni for half her holidays) and I'm 56.  I'm pretty worn out with my public sector role tbh and really look forward to the freedom of retirement.   So my ealiest retirement date could be August 2024 but I'll see how I feel in terms of hanging on to August 2026.  

[Deleted User]

Frugaliza. Your figures look ok to perhaps go at 58. Don’t forget you should also be receiving a lump sum with your pension. This could be used to provide your emergency fund plus some treats between now and 67. Is your mortgage paid off? Your gross pension at 58 looks to be over 26000 which is very healthy . Of course another 400 a year from 60 would be good too! However you would have received 48000 pension by age by 60 should you take it at 58. Even with inflation it would be a good few years before you missed out. Also by that time you would have your state pension too. Another consideration would be some sort of phased retirement. Lots to think about. Best wishes.

Savvy_Sue

Frugaliza said:

The other issue I wonder about is how big a nest egg/rainy day fund is it prudent to aim for to cover big one offs and emergencies that might crop up in the future?   People talk of 3-6 months income for an emergency fund - but the pension is guaranteed income so that  measure doesn't seem relevant.   

To give context I'm single (no intention of changing this status!) a DS and DD of 21 and 19 who who've flown the nest now (DD returns from uni for half her holidays) and I'm 56.  I'm pretty worn out with my public sector role tbh and really look forward to the freedom of retirement.   So my ealiest retirement date could be August 2024 but I'll see how I feel in terms of hanging on to August 2026.  

For me, my nest egg / rainy day fund would be for things like

• the roof leaking (the main roof has been done sufficiently recently that I think it will see us out, but we also have a patch of flat roof which is likely to need re-doing at regular intervals for as long as we stay here)
  
  
• replacing the boiler (ours isn't very old but I'm conscious that when it does need replacing, we'd probably have to or would want to go for heat pump palaver which would be pricey)
  
  
• all the white goods dying at once (oven is fairly new, no dishwasher, tumble drier is fairly new, washing machine is probably the next one to go although the fridge/freezer must be the oldest, they have always had the grace to die singly in the past but you never know ...)
  
  
• the car dying, although one consideration would be whether it was possible / time to give it up
  
  
• major internal work like ripping out the bath for a level shower, replacing the kitchen because the units are falling apart, a need to generally future-proof the house
  
  
• a deposit for a house move, if such were contemplated - could be tricky if your assets are illiquid!

and I'm with Baron_Dale on thinking about a phased retirement! A colleague has just gone from f/t to 3 days pw. I've tried to go down from 4 days to 3 but it hasn't been possible, I haven't worked f/t for a very long time and absolutely could not do it now ... 

Albermarle

trevjl said:

as I want to enjoy today as well as tomorrow if you know what I mean

Which is a very good point.

I follow the pensions boards closely but sometimes find myself shaking my head when I hear people chucking almost everything into their pension at the expense of living and enjoying the now. Some will never be able enjoy their accumulations.

A little bit of an unfair generalisation about most of the posters on the Pensions Board. It is normally pretty sound advice that is given eg
1) For anyone not to opt out of their workplace pension.
2) To at least be aware that adding 8% pa will not be adequate to generate a decent retirement income ( recipients of public sector pensions excepted) 
3) For higher rate taxpayers to invest any spare cash via their pension
4) Giving general info about pensions/investments/ related tax issues on what is a confusing subject for many .

However no regular poster will advocate for not enjoying life now , just to stuff a pension. It is about finding the right balance, and maximising opportunities to build up a pot whilst you can.

trevjl

I don't disagree and I do find it very very useful with some great helpful minds on there.
I did say "Sometimes"

This one springs to mid recently
https://forums.moneysavingexpert.com/discussion/6418679/is-it-time-to-slow-down-on-the-saving-and-start-spending-a-little-more/p1

Albermarle

trevjl said:

I don't disagree and I do find it very very useful with some great helpful minds on there.
I did say "Sometimes"

This one springs to mid recently
https://forums.moneysavingexpert.com/discussion/6418679/is-it-time-to-slow-down-on-the-saving-and-start-spending-a-little-more/p1

That was a new poster, and I agree with you about the sentiments expressed. I also pointed out to them as a reply that earning £100K was not actually a problem ( they were complaining about tax ) . In another thread they made some aggressive comments about Rishi Sunak being a 'Damned Socialist' 
It is an internet forum, so you will always get a few 'outliers' .