How much to live on

Albermarle

[Deleted User] said:

If you worry about every possibility you will never retire! The only certainty is that you are growing older and time is passing so make the most of it!

It is a bit of a chicken and egg scenario. You worry about unexpected costs in the future, so you build up a fund to cover them, and then no worry anymore

[Deleted User]

Of course not everyone will not be able to build up extensive funds, me included.

hugheskevi

Regarding large, one-off expenses, it is perhaps worth noting that this is an area where Defined Contribution pension may be better than Defined Benefit pension.

This is because the expense can be met from Defined Contribution funds and thus automatically funded over time as you draw slightly less than you would have done in future years. Whereas with a Defined Benefit pension you would need to borrow money if you did not have sufficient reserves to meet the cost. 

It is well worth going through everything prior to retirement to determine what either needs replacing or modernising (roof, car, boiler, garden, kitchen, bathroom, decoration, computer, phone, etc) and doing it prior to retirement (or ensuring funds are available if you plan to do it when retired),  as well as considering what is likely to need replacing in the foreseeable future. That should go a long way to de-risking at least the early years of retirement.

It would also be prudent for many to plan to move to smaller, more managable properties at around the age of 75 or so, depending on health. That might well free up some equity, as well as reducing risks about large maintenance bills later in life.

shortperson

@hugheskevi I agree with going through the 'shopping' list - this is exactly what my husband and I have done, now hopefully only 18 months away from retirement. We worked out all the things we probably need to replace and the likely cost as of today - we will then fund those from the cash we have, which is not included in any of our cashflow modelling plans for our retirement (which uses our ISAs, SIPPs, state pension and value of the house, in that order) We are also mindful that around our late 60s we need to decide if we should downsize or plan for equity release (we have no-one to leave our 'estate' to so need to spend as much of our combined pot as possible). We are constantly checking and re-checking our figures, as well as getting updates from our IFA and hope that we can make our retirement a reality soon.   

Floss

shortperson said:

 we have no-one to leave our 'estate' to so need to spend as much of our combined pot as possible 

You don't need to try & spend it all - either or both of you may need residential care, or you could leave any residue to a favoured charity or organisation for the benefit of others, such as a hospice (which are not state-funded).

[Deleted User]

Only a small relative number of people eventually need residential care. Enjoy your money. I doubt many people lay dying saying 'I wish I had saved more and been more frugal!'

Enjoying_life_more

Following on from my post about how much I will need to live on in retirement - I have recently accessed some of my pension to pay off debts and my mortgage - I wouldn’t have paid my mortgage off if the interest rates hadn’t increased and I know some would advise against doing so but it’s done now and the relief I feel is well worth it.

I still have pension left in drawdown and I will also have a small DB pension with very small lump sum which I can take nearer to retirement - hopefully the lump sum and savings will subsidise my income, cover another new to me car, any household repairs and white goods I may need - as for a new roof I’m hoping I’ll outlive mine.  My house is 100 years old and the roof was replaced in the 90s it’s one of the newest on my street so hopefully many years left in it yet  - in the worse case scenario I could move to a cheaper property or equity release ?

SouthCoastBoy

[Deleted User] said:

If you worry about every possibility you will never retire! The only certainty is that you are growing older and time is passing so make the most of it!

very wise words, and a position i am unfortunately in, being a natural worrier.

shortperson

Floss said:

shortperson said:

 we have no-one to leave our 'estate' to so need to spend as much of our combined pot as possible 

You don't need to try & spend it all - either or both of you may need residential care, or you could leave any residue to a favoured charity or organisation for the benefit of others, such as a hospice (which are not state-funded).

Ah that is in our plans too Floss, thank you. We are going to choose a charity to leave any residue to as I can't imagine we will plan our spending *that* well!

[Deleted User]

For those who may be interested I have put my updated budget plans on my thread 'The Senior Wonder Years.' Feel free to pop along for a read!