How much to live on

jackieblack

I’m planning to take the maximum tax free lump sum so I can go early, as a means of helping bridge the gap to SPA. Once I get my state pension I should be ok income wise - as I’ve never been a high or even an average income earner, I can comfortably live on what many others would consider an unmanageably low amount.

uralmaid

My husband took the maximum and was still left with a healthy monthly pension.  It was a good decision as some months later the company he was with closed, and a lot of his co-workers who were eligible to take their pension lost out substantially on the lump sums they were able to take. We both retired at 52 and haven't regretted it at all, mortgage free and able to buy things we want, when we want them,  and now the state pension has kicked in it is even better.  I would recommend anyone who is able to, to retire early. Life is too short and no-one knows what's around the corner.  Of course it depends on your lifestyle too.

Albermarle

The pension board particularly (although I fully understand the reasons why) tends to base all ideas on maximum financial gain rather than personal circumstances and plans. 

To be fair many new posters on the pensions forum, say they are going to take the lump sum, whether it is from a public or private sector DB or from their DC pot.
Many have given no thought as to whether it is a sensible thing to do, only just to take it because it is there.
Or they are labouring under some misapprehension such as with a DB scheme where they have not taken annual  inflationary increases into account, or with a DC scheme that one day the 25% tax free will be abolished ( it won't), or somehow the money is best invested outside a pension ( normally not).
So the forum usually points out this flawed thinking, so at least the poster can make their decision based on facts, and not wrong assumptions.
Some actually change their mind, and do not take the lump sum in the end.
In simple terms you can generalise and say if you have a plan/need for the money, then taking the lump sum makes sense. If you have no need for the money, then probably best not to take it ( but each case can be a bit different).

TallGirl

To take the lump sum or not is a really interesting question as you obviously need to know what to do with it afterwards. I had not planned on taking mine from my DC scheme but now I will. I am actually delaying my move to Denmark until I turn 55 so I can take it before I move. Denmark not only taxes you when you take your pension they also take you on any increases before you even start withdrawing it. There is no annual tax free allowance for anything (other than income) so you pay tax of everything. I am planning on taking mine before I move and then invest it as my tax rate when I come to drawn down my pension will be in the region of 45% plus so think it is worth it. Now if only I could find an adviser who could check this for me but to this date I cannot so have to trust myself. 

louby40

I'll be taking the lower lump sum and higher pension. It suits my circumstances. My mortgage is already paid off as I downsized this year and as I'm retiring at 56 I need as much monthly income as I can get. I have no debt. 

Ive been tracking my spending for 18 months now and currently live off what my retirement income should be whilst saving the rest. I'm going to supplement my income with a part time job but it was important to me that I could manage on my pension if needed. 

Everyone's personal financial circumstances and different.

Tastiger

Hi there. It's been a long time since I posted here, but having done 2 more years at work, I am finally planning to take retirement in July at 59. I practiced living on what I will get in retirement and it looks OK. I was aiming for what the PLSA call a moderate retirement, though to be honest they spend money on things we definitely wouldn't.
This year I see the Living Standards are suggesting £43k for a couple. It was £34k in 2023 - that's heck of an inflation.
I always thought it useful to share figures, so here's mine. We have no mortgage and kids have finished uni.
 I will have a teachers DB pension which will look to bring in around £21k a year after taxes. Also a lump sum which will be invested. We have  combined SIPPs of £122k, and around £46k in ISAs. These are to bridge the gap between 59 and 67 when I will get a full state pension. My wife will also get a full state pension about 6 years after me. 
I'm fairly confident having does many simulations that we will have £34k a year rising in line with inflation - and £40k when we both get state pension.
Neither of us have expensive hobbies, and we run one used car tga we will replace with a used car when needed. We do plan on doing a bit of travelling in our go-go years.
So that's the plan. Does that seem reasonable? Many thanks for your thoughts.

Organgrinder

Tastiger said:

Hi there. It's been a long time since I posted here, but having done 2 more years at work, I am finally planning to take retirement in July at 59. I practiced living on what I will get in retirement and it looks OK. I was aiming for what the PLSA call a moderate retirement, though to be honest they spend money on things we definitely wouldn't.
This year I see the Living Standards are suggesting £43k for a couple. It was £34k in 2023 - that's heck of an inflation.
I always thought it useful to share figures, so here's mine. We have no mortgage and kids have finished uni.
 I will have a teachers DB pension which will look to bring in around £21k a year after taxes. Also a lump sum which will be invested. We have  combined SIPPs of £122k, and around £46k in ISAs. These are to bridge the gap between 59 and 67 when I will get a full state pension. My wife will also get a full state pension about 6 years after me. 
I'm fairly confident having does many simulations that we will have £34k a year rising in line with inflation - and £40k when we both get state pension.
Neither of us have expensive hobbies, and we run one used car tga we will replace with a used car when needed. We do plan on doing a bit of travelling in our go-go years.
So that's the plan. Does that seem reasonable? Many thanks for your thoughts.

Seems totally reasonable to me.  I'm assuming your figures are after tax? 

£40k is the equivalent of two full time jobs at £23k so with no mortgage etc it looks like a good amount of disposable income.

Good luck with it. Everyone's circumstances are different, and there are many ways to top up your income if need be.

Tastiger

Organgrinder said:

Tastiger said:

Hi there. It's been a long time since I posted here, but having done 2 more years at work, I am finally planning to take retirement in July at 59. I practiced living on what I will get in retirement and it looks OK. I was aiming for what the PLSA call a moderate retirement, though to be honest they spend money on things we definitely wouldn't.
This year I see the Living Standards are suggesting £43k for a couple. It was £34k in 2023 - that's heck of an inflation.
I always thought it useful to share figures, so here's mine. We have no mortgage and kids have finished uni.
 I will have a teachers DB pension which will look to bring in around £21k a year after taxes. Also a lump sum which will be invested. We have  combined SIPPs of £122k, and around £46k in ISAs. These are to bridge the gap between 59 and 67 when I will get a full state pension. My wife will also get a full state pension about 6 years after me. 
I'm fairly confident having does many simulations that we will have £34k a year rising in line with inflation - and £40k when we both get state pension.
Neither of us have expensive hobbies, and we run one used car tga we will replace with a used car when needed. We do plan on doing a bit of travelling in our go-go years.
So that's the plan. Does that seem reasonable? Many thanks for your thoughts.

Seems totally reasonable to me.  I'm assuming your figures are after tax? 

£40k is the equivalent of two full time jobs at £23k so with no mortgage etc it looks like a good amount of disposable income.

Good luck with it. Everyone's circumstances are different, and there are many ways to top up your income if need be.

Yes, figures are after tax. I will be 73 before it's £40k- its £34k for the next 14 years, but index linked to CPI

Albermarle

 I was aiming for what the PLSA call a moderate retirement, though to be honest they spend money on things we definitely wouldn't.
This year I see the Living Standards are suggesting £43k for a couple. It was £34k in 2023 - that's heck of an inflation.

You could say the PLSA figures are a bit high, although personally I think the issue is in the description 'moderate' and for the higher level 'comfortable' .
Whereas figures from Which use the terms 'comfortable and 'luxury' In fact for lower incomes.
Anyway they are both only guidelines at best .

The jump from £34 K to £43K I think took account two  years of high inflation ( > 20%) 

Sarahspangles

Tastiger said:

I was aiming for what the PLSA call a moderate retirement, though to be honest they spend money on things we definitely wouldn't.

This year I see the Living Standards are suggesting £43k for a couple. It was £34k in 2023 - that's heck of an inflation.

I think a lot of the jump this year relates to “helping others”. Hmmm.

When we met we were both, as individuals, on track for a moderate income in retirement. As a couple we’ll be comfortable. It wasn’t a consideration when we met, but it was a pleasant realisation as we’d both got used to being the breadwinner.

We must be ‘tight’. Going into retirement, our cars, kitchen and bathroom are all older than the suggested replacement age, we never have takeaways, and OH refuses to shell out for Sky and has to watch sport at the pub!