How much to live on

Tastiger

I know everyone is different, but the most quoted "how much you need to live on" is the Retirement living standards https://www.retirementlivingstandards.org.uk/
It always seemed a bit high to me, being pretty much what we lived on during working years.
"Which?" normally quotes less and feels more comfortable to me https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9
What does everybody else think?

SouthCoastBoy

I have been conducting an experiment over the last 18 mths, we opened a joint account and put £2500 per month in and the vast majority of the spending comes out of that except a couple of small direct debits and a small amount of discretionary spending.

At the end of the first year we had a surplus and this year we are also running a surplus of around 2k, so I think 30k a year net of income tax is a good figure for us.

BooJewels

I think the only way to form an idea of what you will need to live on, is to do your own figures, as @SouthCoastBoy has done - I'm not sure that other people's figures are that helpful at the end of the day.  Their value is perhaps in giving you headers or a framework to work out your own numbers for.

For example, I looked briefly at the Which? figures and when you look at the breakdown of spending in the Essential, Comfortable and Luxurious tabs, I find it unlikely that someone who has budgeted for and can afford a Luxurious lifestyle is spending exactly the same as someone on the Essential tab on groceries.   If you're not watching the pennies quite so carefully, you're likely to spend a bit more on food by not needing to shop around and going for convenience over savings etc.  If you have a set budget, you're likely to be more careful.

In my current circumstances, which relate in absolutely no way to where I expected to be at this point in life, I'm keeping much more data on my spending and keeping an assortment of lists.  Not sure how it will be useful going forwards, but I do know that in 2023 so far, I've averaged £230.93 per month on 'groceries' and that would give rise to an annual total of £2,771.16 spending - a bit more than the Which? figures for this item, for all 3 levels.  I'd probably aim for and consider myself somewhere in the 'Comfortable' list.  But I know that I spend a bit more than I should/could in this area, as I don't drive so do most of my grocery shopping on-line, so don't always get to buy what I'd ideally choose and pay for delivery charges too.  It's not an efficient way to shop really.

Once I can get driving lessons sorted (I'm on a waiting list) and hopefully eventually get driving, obviously those costs will be a massive addition, but I would expect other spending to fall a little if I can buy things in person instead of ordering every little DIY do-dad on line instead of just going shopping.

Skint_yet_Again

I am currently living off the equity from selling my home and downsizing. This has meant I can retire at 55. One pension starts at 60 and combined with savings will give me £10000 a year until 67 when my 2nd pension and state pension will give me a total of around £17k a year. 

Current monthly income £833
Outgoings £788.89

Phone (sim only) £10 (unlimited calls & texts plus 25g data)

Tv licence 13.25 (freeview only but I also bought a freeview recorder)

Water £24 (water meter)

Council tax £97 (over 10 months & the money from the other 2 months will go into holiday fund to visit family down south)

Union £2.14

Gas & Electric £110 (currently have £400 credit to go into winter)

Annual bills £100 

Includes house & car insurance, breakdown cover, car tax, dentist, clothes, shoes/boots, cheap internet glasses (free eye tests & free medical prescriptions due to medical conditions)

Birthdays / Xmas £50

Car fund £50. (Mot / service/ tyres repairs etc. Current balance £900)

Petrol £40

Entertainment £100   (includes lunches/meals out, cinema, days out)

Food £160

Leisure centre membership £32.50

This is my lifestyle choice and I realise it wouldn’t suit everyone but it’s the best decision for me and my health & mental well-being. 

barnstar2077

Skint_yet_Again said:

I am currently living off the equity from selling my home and downsizing. This has meant I can retire at 55. One pension starts at 60 and combined with savings will give me £10000 a year until 67 when my 2nd pension and state pension will give me a total of around £17k a year. 

Current monthly income £833
Outgoings £788.89

Phone (sim only) £10 (unlimited calls & texts plus 25g data)

Tv licence 13.25 (freeview only but I also bought a freeview recorder)

Water £24 (water meter)

Council tax £97 (over 10 months & the money from the other 2 months will go into holiday fund to visit family down south)

Union £2.14

Gas & Electric £110 (currently have £400 credit to go into winter)

Annual bills £100 

Includes house & car insurance, breakdown cover, car tax, dentist, clothes, shoes/boots, cheap internet glasses (free eye tests & free medical prescriptions due to medical conditions)

Birthdays / Xmas £50

Car fund £50. (Mot / service/ tyres repairs etc. Current balance £900)

Petrol £40

Entertainment £100   (includes lunches/meals out, cinema, days out)

Food £160

Leisure centre membership £32.50

This is my lifestyle choice and I realise it wouldn’t suit everyone but it’s the best decision for me and my health & mental well-being. 

Hi Skint_yet_AGain.  I bet it must feel good to be free of work!

Can I ask if you have a partner to help you with the bills too?  Your outgoings are quite close to your current income, do you have a contingency plan if inflation keeps nipping at our heels?

Also, have you seen the Paupers thread on the pensions board?  It might be of interest too.

A Paupers Pension Tale (Not many nuts to dig up) — MoneySavingExpert Forum

Pat38493

I have been using a site called "Money Dashboard" for the last 18 months to track how much I am spending on everything - you can link the site to your bank accounts, credit cards and so on and use it to categorize all your spending, run reports, and easily see what the situation will be when things change e.g. mortgage paid off.

Skint_yet_Again

Thanks @barnstar2077

No partner just me. I have had work done on the house, roof, boiler, new bathroom, replaced bath with shower and am not expecting any maintenance bills in the near future. I have spread the equity over fixed 2 & 3 year bonds and instant access savings accounts. I have £44 left a month and I could access some interest if I wanted to but at the moment I am just letting it build up in my savings accounts. (Instant access approx £40pm) When my bonds mature I may reinvest the money & interest into accounts that pay the interest monthly so the extra interest money is there if I need it. 

I cook from scratch / batch cook supplemented with seasonal veg from DF and neighbours allotments. 

I will get a lump sum at 60 from pension 1 which will be invested and /or used to replace my car if necessary. If my car goes before then I will get the bus / lifts from family & friends to the supermarket when they are going. It would probably work out cheaper to get the bus/give them a contribution towards petrol than run my own car 😆

Albermarle

Tastiger said:

I know everyone is different, but the most quoted "how much you need to live on" is the Retirement living standards https://www.retirementlivingstandards.org.uk/
It always seemed a bit high to me, being pretty much what we lived on during working years.
"Which?" normally quotes less and feels more comfortable to me https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9
What does everybody else think?

Firstly I think that the descriptions in the first report i.e Minimum- Moderate- Comfortable are more realistic than the Which ones; Essential- Comfortable - Luxury .
To most people a Luxury retirement would conjure up visions of regular exotic holidays; expensive cars; large house in a posh area; exclusive golf club; second home in Cornwall; expensive clothes; fancy restaurants; large yacht in a marina; owning racehorses etc etc Probably would cost more like £44K a month, rather than per year.

More importantly the figures that Which give on how much you need to fund these retirements is misleading.
For example it says for a single person for a comfortable retirement ( £20K needed) a drawdown pot of £173K would be needed, assuming retirement at 66 and a full state pension.
This looked low to me as normally it is recommended not to take more than 3.5%/4% pa, which means a pot in excess of £250K is needed.
Looking in the detail they are saying that £10K pa should be taken out, and taking into account investment growth, the pot should last 20 years.
So what happens after 20 years - a halving of income? Not great considering about 40% of people will still be alive at that age.
Also what if you want to retire earlier than state pension age?

Underestimating how much you need to have a nice and reasonably early retirement, when you do not have a substantial  DB pension is a classic mistake made by many, and Which seem to have fallen into the same trap.

BooJewels

@Skint_yet_Again - I've opted for monthly interest on my assorted fixes, bonds and EA savings and whilst at the moment I'm keeping them where they are (or moving them to decently paying accounts) to compound, knowing that I can get at it as needed is psychologically important for me.  I also like seeing it getting added each month - better than waiting a full year to see it.

I would also add a personal observation about driving and owning a car.  Since my husband died and I find myself on my own and not able to drive - it's become really isolating.  I have no family locally and no friends to call upon.  We don't have a very useful bus service (an intercity that makes a modest loop off the motorway once an hour), so I can only get anywhere on foot or in a taxi.  I manage perfectly well, but would dearly love the freedom of doing my own shopping - it becomes a treat to just choose my own tomatoes etc.  I'm now deeply regretting some of the choices I made 30 years ago - like where I live.

MarthaKL

BooJewels said:

@Skint_yet_Again - I've opted for monthly interest on my assorted fixes, bonds and EA savings and whilst at the moment I'm keeping them where they are (or moving them to decently paying accounts) to compound, knowing that I can get at it as needed is psychologically important for me.  I also like seeing it getting added each month - better than waiting a full year to see it.

I would also add a personal observation about driving and owning a car.  Since my husband died and I find myself on my own and not able to drive - it's become really isolating.  I have no family locally and no friends to call upon.  We don't have a very useful bus service (an intercity that makes a modest loop off the motorway once an hour), so I can only get anywhere on foot or in a taxi.  I manage perfectly well, but would dearly love the freedom of doing my own shopping - it becomes a treat to just choose my own tomatoes etc.  I'm now deeply regretting some of the choices I made 30 years ago - like where I live.

I used to live in a tiny hamlet with no bus service and a two mile walk to buy a pint of milk. It turned out to be a huge mistake as I was a reluctant driver - plus I shared the car with my husband who needed it to commute. We were bowled over by the cute period cottage and extensive garden, but we definitely let the heart rule the head and soon regretted our choice. Our next move was to a house ten minutes walk from the town centre, with a well stocked local shop just round the corner.  We live on a peaceful road near a pretty town. This suits our lifestyle so much better, but we are now on the lookout for a new place with even more facilities on the doorstep. Would you consider moving to somewhere more convenient, as it sounds as though you have few ties where you are?