How much to live on

Organgrinder

Retirement planning by it's very nature is different for everyone.

If you have indexed linked final salary pensions it's probably very easy. You need X and once you hit X you're ok. Or if you can manage between retiring and getting the state pension 

Those with pension pots, or a mix of final salary pensions and pension pots have a lot more planning to do to ensure there is sufficient in the pots to drawdown/buy an annuity etc.

Little wonder therefore that many of us try to make extra money (for nothing other than a few minutes work), or look to ensure our investments make good returns.

It's been a real eye opener for me. Fortunately I've a good mind for figures, being a mathematician which helps immensely, particularly as I enjoy anything with numbers and am the sort of person open to any new ideas for helping me through the retirement maze.

I've yet to find I've hit a dead end. Nor anything nor anyone else for that matter!

kempiejon

blue.peter said:

kempiejon said:

I was looking at a website the other day that suggested people would spend about a third less in retirement.

Don't rely on it. It might be true for some (or even most) people, but that doesn't necessarily mean that it's true for you. You have to support your own lifestyle in retirement, not somebody else's.

Oh I don't have anyone else's numbers except my own. I've itemised spending and added a few predictable expenses and an element of safety. My plan gives more disposable income in retirement than employment.

barnstar2077

[Deleted User] said:

Retirement income for me is fortunately easy. State pension and occupational pension both index linked. SP every 4 weeks and occupational pension is paid on the 14th of each month, so planning is easy too. I only include 12 SP payments in the budget, so the 13th will be a bonus to be saved or used for a treat! 

Very small annuity, but it fills car petrol tank once a month! 

Nice not having to manage investments, drawdown or whatever.

Current budget requires about £24500 a year. Fortunately pension income is greater, so I am able to save some! This includes everything, monthly and annual bills, food, leisure, travel expenses and money in virtual pots for house, garden, Christmas, birthdays etc…..

Limited savings (recently used a lot of them to buy a newer car for cash) but plan to build them up again over the next year or so. Savings are in a Cash ISA and Premium Bonds. One other account contains the monies for the annual expenses. So I keep things simple!

A couple of house improvements being undertaken before Christmas, but money is put aside for them.

Planning only short U.K. trips next year in view of current world instability. May venture abroad in 2026, but nothing definite.

No expensive hobbies. Use One Card for swimming £23 a month  and that’s it lol. Do not drink alcohol so no expense there lol.

Reading, gardening and walking are not expensive activities either. Eat out with friends and family a few times a month. 

Apart from broadband, mobile and my BT/EE TV Box I avoid all subscriptions like the plague. 

Neither rich nor poor but content.

£24,500 a year sounds like a lot for someone who doesn't spend much on hobbies.  What do you think is the biggest contributor to your spend?  Are you mortgage or rent free?

Organgrinder

[Deleted User] said:

Retirement income for me is fortunately easy. State pension and occupational pension both index linked. SP every 4 weeks and occupational pension is paid on the 14th of each month, so planning is easy too. I only include 12 SP payments in the budget, so the 13th will be a bonus to be saved or used for a treat! 

Very small annuity, but it fills car petrol tank once a month! 

Nice not having to manage investments, drawdown or whatever.

Current budget requires about £24500 a year. Fortunately pension income is greater, so I am able to save some! This includes everything, monthly and annual bills, food, leisure, travel expenses and money in virtual pots for house, garden, Christmas, birthdays etc…..

Limited savings (recently used a lot of them to buy a newer car for cash) but plan to build them up again over the next year or so. Savings are in a Cash ISA and Premium Bonds. One other account contains the monies for the annual expenses. So I keep things simple!

A couple of house improvements being undertaken before Christmas, but money is put aside for them.

Planning only short U.K. trips next year in view of current world instability. May venture abroad in 2026, but nothing definite.

No expensive hobbies. Use One Card for swimming £23 a month  and that’s it lol. Do not drink alcohol so no expense there lol.

Reading, gardening and walking are not expensive activities either. Eat out with friends and family a few times a month. 

Apart from broadband, mobile and my BT/EE TV Box I avoid all subscriptions like the plague. 

Neither rich nor poor but content.

But recently, elevated to the Lords I see.

Welcome back.

Albermarle

Nice not having to manage investments, drawdown or whatever.

Although if you do have to, it can mean you can while away an hour a day on the MSE Savings/Investments/Pensions forums, to try and work out if you are doing it right  !

barnstar2077

Albermarle said:

Nice not having to manage investments, drawdown or whatever.

Although if you do have to, it can mean you can while away an hour a day on the MSE Savings/Investments/Pensions forums, to try and work out if you are doing it right  !

Also, don't forget all the time making and tweaking spreadsheets!  People spend a lot of money trying to keep themselves entertained these days and this chap is throwing away hours and hours of absorbing study! :  )

Organgrinder

Well my exam marking has ended. And another session due in February.

It all goes into my pension pot for those important years between finishing work and getting the state pension.

Should be £4,000+ this year.

But equally, I really enjoy it. It's rewarding on many fronts, not just financially.

Organgrinder

Well another month of stoozing done (to aid with how much I will have to live on).

That's £16,000 this year give or take, earning over 5% tax free interest. Mostly generated from spending on interest free credit card accounts which still have 10 months to run. Obviously a big note in the diary to pay these off in full!

Still lots of bank switching offers about, though after several switches last year I'm not eligible.

A couple of big dates coming up in the next few months. Eg regular saver maturing.

Also doing a little bit of private tutoring.

Next step is to cut my higher rate tax bill to zero by topping up my private pension. Our crazy tax system let's us avoid 40% tax by putting it in a pension where we can take 25% of it tax free and only pay 20% tax on the remainder. 

Eg I owe the tax man £1000. So I put £4000 into a pension. He tops this up by £1000 so I now have £5000 but he also wipes out the £1000 I owe him as I've only had 20% tax relief and not 40%.

Out of this £5000 I can take £1250 tax free with 20% tax on the remainder. So it's net worth to me in total is £4250.

So had I not put it into the pension I would have had a net £3000. £4000 minus the £1000 I owe HMRC.

By putting it into the pension it's net value is £4250, a whopping 41.6% increase. 

Bonkers.

uralmaid

I don't think it is at all unfair.  MSE is for everyone . As I see it @Organgrinder was simply explaining how they manage their affairs.  It's nothing to do with being "well off" as you put it. Not everyone on these forums is in debt or trying to get out of it, but if they are then there are the categories on the forum to help them. I have every sympathy for people in that situation and thank the Lord that I am not one of them.  Everyone has their own choices as to how they spend their money, and these pages don't need people casting aspersions. Live and let live. It's the Governments fault if anyone's for allowing the tax system to function as it does. Why should anyone be castigated for it.  May I suggest that if you disagree with the MSE Forum then don't be a member. Merry Christmas.

Albermarle

[Deleted User] said:

Organgrinder said:

Well another month of stoozing done (to aid with how much I will have to live on).

That's £16,000 this year give or take, earning over 5% tax free interest. Mostly generated from spending on interest free credit card accounts which still have 10 months to run. Obviously a big note in the diary to pay these off in full!

Still lots of bank switching offers about, though after several switches last year I'm not eligible.

A couple of big dates coming up in the next few months. Eg regular saver maturing.

Also doing a little bit of private tutoring.

Next step is to cut my higher rate tax bill to zero by topping up my private pension. Our crazy tax system let's us avoid 40% tax by putting it in a pension where we can take 25% of it tax free and only pay 20% tax on the remainder. 

Eg I owe the tax man £1000. So I put £4000 into a pension. He tops this up by £1000 so I now have £5000 but he also wipes out the £1000 I owe him as I've only had 20% tax relief and not 40%.

Out of this £5000 I can take £1250 tax free with 20% tax on the remainder. So it's net worth to me in total is £4250.

So had I not put it into the pension I would have had a net £3000. £4000 minus the £1000 I owe HMRC.

By putting it into the pension it's net value is £4250, a whopping 41.6% increase. 

Bonkers.

Seems very unfair to me. Those with least end up paying more not knowing about all the tax loopholes.
In my world higher rate tax payers would get less tax relief than basic rate tax payers on any pension contributions.

My main disagreement with MSE Forum is that some of the boards contain people who want to get the most out of the system and put the least in even if they have the means to do so. Gone are the days when the forum existed mainly to help the average person get out of debt and manage finances properly.  Many areas have been taken over by the well off wanting to be even better off.

@organgrinder some of your posts may be suited sorted to the Savings and Investment area of the forum. They don't seem to be that much about how much I need to live on, but rather look how much I have made lol!

I can see your point, but lets be clear getting higher rate tax relief on pension contributions is not a loophole.
It is a well known part of todays tax system and is utilised by Millions, not just a specialised few with insider knowledge. In most cases it just happens automatically.
You could say it is a generous benefit for higher earners for sure. Every budget there is speculation it will be removed/reduced but it never happens, partly because it would be technically difficult within the current tax system.
A higher rate taxpayer would be crazy not to take advantage of it if they can. 

Otherwise if you look at the full list of MSE forums, there are ones about debt, bankruptcy, budgeting, money saving etc 
The 'Debt Free Wannabe' board is by far the busiest of all the forums by a long way .