How much to live on

[Deleted User]

Of course many people lead enjoyable and comfortable retirements on £20000 or less. As has been said many times it can depend on your preferred lifestyle and spending priorities.

louby40

We live in a 4 bedroomed, 3 storey house. Two bedrooms and one bathroom aren't used at all now. The radiators are switched off  and the doors shut in those rooms.

I have had health issues since 2021 and a 3 storey house isn't what we need anymore. My eldest son no longer lives with us and my younger son is nearly 21 and will no doubt move out in the next 5 years, then, the whole top storey of the house will not be used.

We can buy a 2 bedroomed house locally quite easily and this will release much needed equity. In fact I don't think I could retire unless I can use that equity to top up my pension. 

I'll get a lump sum from my teachers pension too which will be £35-40k. I don't have a massive amount of savings really just a few thousand for emergencies.

Lots of things to think about. 

Albermarle

It's just deciding to make that jump. Anyone else manage on £20k a year? 

What income is needed in retirement has been much discussed in this and other threads, with a wide variety of opinions. Plus there are official surveys.
At the lower end of the income spectrum there is some kind of consensus that for a couple two state pensions ( £21K) is probably a minimum needed, especially with the current bout of inflation, as long as you are mortgage/rent free.
However ideally you need an extra £5K pa to avoid too much penny pinching + an emergency savings fund.
£35K pa is a target for a reasonably comfortable retirement for a couple, although many are happy on less.

[Deleted User]

louby40

What do you think you could sell your house for in the current market? How much for a suitable 2 bedroomed house? Personally I would be wary about losing two bedrooms after being used to living in a 4 bedroomed house which also probably has 2 bathrooms. Just thinking about future family visits. Would you still have somewhere as like office space?

Does your partner intend to retire? Do they have a separate income? Sorry about all the questions but they make help you make a decision or assist us making further suggestions.

If partner is working and you will have a pension income of £16000 a year wouldn't that be enough to leave on? Maybe it depends on how much mortgage you owe.
A £40000 pension lump sum plus current savings would be a very good back up for emergencies or whatever.

My older relative and myself co-own a large 4 bedroomed detached with two bathrooms, study and a nice conservatory. We have considered downsizing but rejected the idea owing to our love of the space and the garden. A chair lift ensures my older relative can use all of the house. I like having my small study as my own space and its great when people come to stay.

Furthermore with the current market we would be loath to sell at the moment with the house maybe being marketed for about £50000 less than it was a few months ago.

I fully accept our circumstances are different to yours. The house is mortgage free and we have sufficient income to live here. I think what I am trying to say is that downsizing is not the panacea some believe it to be.

I would also counsel against making decisions when you are feeling down about work and feel that escaping is the only option to an improved life. As I have said above, consider other options for change within your current role. Even going to just 58 would make a huge difference and a target finishing date could motivate you.

MarzipanCrumble

Just remember that the tax band limits have been frozen.  It is all over the financial money pages of the Saturday papers.  Tax will eat into your income (not massively but insiduously year by year unless rescinded by the next Government).

Pat38493

MarzipanCrumble said:

Just remember that the tax band limits have been frozen.  It is all over the financial money pages of the Saturday papers.  Tax will eat into your income (not massively but insiduously year by year unless rescinded by the next Government).

Indeed - this is arguably the biggest stealth tax increase in many years.  Freezing all those allowances every year is probably the equivalent of several pence on the headline income tax rate for an average owner.

louby40

The house next door to me has just sold for £235k, it's slightly smaller though, has a different layout (kitchen on middle floor)  and has a much smaller garden than my house. 

My type of house has been selling for about £250k recently, with one house round the corner that went for £266k 12 months ago. Of course the market has changed now so I doubt that price is realistic.

We don't need a four bedroomed house now.  And the extra stairs for a severe asthmatic are an issue. 

We can buy a 2-3 bedroomed house in this area for about £170-190k which would give me some decent equity. 

I've seen a few part time  NHS admin jobs that could top up my pension as I don't feel ready to completely finish work yet. I don't want to work in education at all anymore. I want a total change and the freedom of choosing to holiday in term time. 

[Deleted User]

The part-time NHS admin jobs seem something worth pursuing. A 0.5 part time role at the lowest band would probably pay at least £9000 a year a good supplement to your £16000 a year pension. However don't forget holiday entitlement will be a great deal less maybe 5 weeks a year.
House prices in your area seem very reasonable. Where I am a 3 bedroom bungalow would be at least £300000 with some going for a lot more.

louby40

Yes Northern house prices are very different to the South of the country. 

Organgrinder

I entirely sympathise with you. 

I've just started a phased retirement. But it still might be 4 or 5 years for me. 

67 is still over 10 years away and the hardest part of my pension planning has been ensuring the gap between early retirement and SPA can be funded whilst also keeping a rainy day pot.

But.....it can be done. Good luck in finding what works for you.