How much to live on

Murphybear

It’s a bit like a “how long is a piece of string” questions.

Our income is about £20k between us.  We live fairly well on that but don’t have many holidays.  We shop at Waitrose a lot, in our little town it’s that or Sainsbury’s.  We have a car which is fairly old but it’s cheap to run.  I have a pension of £800 a year.  That pays for the insurance, servicing and MOT and a few tanks of petrol. 

LordRocket

Many thanks for starting this thread! I follow the Pensions board where the question about how much you need to retire ('the number') is often posed and inevitably throws up answers from people with massive pension pots or incredible final salary schemes asking if £100,000 a year is enough to live on!! (exaggeration there but it's always a large number). It's refreshing to be in the real world with answers around £500 - £1000.

In my case I keep a spreadsheet detailing my current expenses that I amend as and when, for example if a utility direct debit changes or a subscription I have gets cancelled. To estimate my needs for retirement I simply start with my current spreadsheet, take away bills I don't anticipate having when I retire (such as mortgage) and add on extra for additional holidays, running a car (I currently have a company car) and extra discretionary spending. My requirement is £1200 a month / £14400 a year although that doesn't include a small pension I'm drawing now of £4200 per year - so £18600 in total.

I think as other posters have said, and as Covid has taught us, spending money is a funny thing. When I'm at work I can easily go through a tenner a day (that's £200 a month for 20 working days) on Costas and a sandwich, simply because of the convenience. On furlough I've got far more pleasure from taking a flask and a sandwich from home on my daily walk, spending almost nothing in the process. I guess to an extent and as someone else said spending is a mindset and once the basics such as household bills and food are covered it's up to the individual how much or how little they burn through.

Vespaboy

yup the number thread is very interesting and has very diverse posts from very large amounts a month (oh whoa is me)  to I can live off eating cardboard......

It is a funny one , I think as you save all your life it is hard not to think just a bit more or if I get to x then  I will be happy etc. I am sure I could live on less, I could sell my house and downsize and release some cash  but somehow I don't feel ready for that yet, it also seems somehow "wrong" which is bonkers as it is my money and I have earned it but I think that is the saver mindset for you and I reckon changing to depleting ones stash will be difficult to adjust to (I have a DC pot only)

As with most people what I "want" and what I "need" are 2 figures. I want to travel a lot so need to factor that in, I don't need to travel so will I ever have enough? It seems to me a bit like the fantasy you have about winning the lottery really, as you dream of what you would spend £100k on you soon  think well better that imaginary win was £500k  then well really a million is easier and so it goes on .
So  when is enough really enough? - who knows but one things for sure we don't need as much as we think , we can adapt and more income in retirement, whilst easier ( I guess ) does not make you happier. It is usually the little things in life that give you the most pleasure

Silvertabby

This really is a 'one size doesn't fit all' question.

I would say that a good starting point would be your pre-retirement income minus mortgage and purely work related expenses, but plus extra for hobbies, DIY and going out more.

We retired at 60, and my own State pension doesn't kick in for another couple of years - but our joint post tax income already makes us 'very comfortable' in most eyes.  Our only debt is a small car loan, as we do like a new car every 4 or 5 years.  Never been ones for expensive holidays.

I do admire those of you who are happy to budget for £1K per month - but I know I wouldn't be able to do that!  

We are both extremely cautious savers, so monthly 'savings' at the moment are being used to buy my voluntary Class 3 NI conts.  

maisie_cat

Silver tabby's idea is the approach that we took, sold the house and downsized so no mortgage, 2 cars to 1 and a massive saving from not working. One of the things I hadn't appreciated is how much I spent on "work" clothes, now I live in a country uniform of layers and appropriate boots that are some years old. Once we'd calculated the reduced outgoings might be  we could look at whether the reduced income would work. 
Our monthly "bills" are around £550 excluding food and non essentials, and £240 of that is council tax & water. The things we pay for annually are around £1400 although the single biggest item is oil. We have the things that I consider luxury like mobile phones, sky & netflix because we are rural.
The things I didn't budget enough for were sorting the garden/veg plot/woodland, unplanned house maintenance, and oil/electricity. I over estimated how much we'd spend on socialising for convenience reasons followed by Covid restrictions.
On paper we are "income poor" according to ONS statistics, but I certainly don't feel it, it really depends on what things give you satisfaction in life and whether or not those things are expensive. I'm quite happy sitting here with a cup of tea, by a fire with a snoring cat , hubby tends towards hobbies that have costs but not extreme ones.
When we lived in a Surrey "village" it was too easy to pop to the shops for pizza, beer, chocolate, coffee etc, and we don't do that now as the shops, cafes, pubs are not near. I personally was also less organised with food shopping, spending far too much for convenience.
In essence, are you happy with a simple low cost life, or do you need activities and "stuff" to prevent you from climbing the walls?

Silvertabby

As Maisie says, the savings from not working are much higher than people think.  No NI or pension contributions, less tax, no commutation costs, lunches, coffees or even the myriad workplace collections for babies, weddings, etc.  It all adds up.  And, like Maisie, I've spent much less on clothes since I retired.

Yes, in my case I've opted to spend money on the purchase of voluntary Class 3 NI, but I'd be daft not to. 

Pennylane

We’re just thinking about this too. We both now get state pension and OH still works fulltime self employed but keeps saying he will stop soon.  We have no mortgage and we have income from small property we rent out. We don’t live a lavish lifestyle but we eat well and always have a lovely warm house. No way am I scrimping on heat or food like some people do.  If I am cold I am miserable!  Looks like we will have to start number crunching but it is so dull.  

scottish_lassy

Thank you so much everybody.  I certainly don't live an extravagant lifestyle and enjoy pottering.  The reason this has come up just now is that work are making a one time offer for early retirement.  I don't even know if my application would even be considered as I don't think my post is expendable but it got me thinking 'do I work on and on and maybe not even be able to enjoy retirement when it comes.  Maybe accepting a lower income and having 'time' to enjoy would be more precious.

fred246

We have spent a lot more on lunches since I retired. We rediscovered the pub lunch. Nice country walk then a pint and lunch at a pub. When you retired you could go on a cruise all the time. Spending is really 'how long is a piece of string'. You really have to do your own figures. A lot is what you are used to. It probably wouldn't be nice to massively reduce your spending to retire.

Farway

scottish_lassy said:

Thank you so much everybody.  I certainly don't live an extravagant lifestyle and enjoy pottering.  The reason this has come up just now is that work are making a one time offer for early retirement.  I don't even know if my application would even be considered as I don't think my post is expendable but it got me thinking 'do I work on and on and maybe not even be able to enjoy retirement when it comes.  Maybe accepting a lower income and having 'time' to enjoy would be more precious.

Years back there was a similar offer at my place, with voluntary redundancies.

Did the sums and applied, although my job was not expendable it did allow someone whose job was expendable to step into my spot, thus he stayed & I went which made both of us happy

I've never looked back and in the intervening years did the things I wanted at the time I wanted. Nothing extravagant but affordable

If the sums work I recommend you grab it with both hands