How much to live on

Humdinger1

Good to see you again @[Deleted User]

Organgrinder

Personally I think how much to live on is clearly dependent on key things.

How much you have coming in.
How much you have going out.

The former for many is complex. There are those who managed to maximise their pensions, either via additional contributions or by purchasing extra NI years. Many on this thread and indeed other threads have commented on that. There's also the matter of whether pensions are index linked and not everyone has that certainty.

Equally how much you have going out dictates how much you have left over for luxuries.

With many of us having to also plan around families/partners etc, I think it's important to recognise that some people need to maximise their income in whatever ways they can.

As I always say,  I'm happy to learn from others on how I can maximise my income and I share it as I've said many a time, so that others who choose to do likewise can benefit from it. 

In today's uncertain world, I think it's sensible to take this approach. 

So, there we are then.

[Deleted User]

For me  'How much you need to live on' includes everything. As a retired person I know what my income will be each year and budget accordingly. Of course I may get lucky and have a premium bond or lottery win, but unfortunately one cannot budget for those!

I am fortunate that I have sufficient income to meet my needs with some left over for savings.

Obviously for those planning their retirement the approach may be different, as they calculate and decide how much they believe they will need when no longer working.

Having said that, I have been pleasantly surprised with the amount ( less than expected) I actually need to to live my chosen lifestyle. Without having to pay a mortgage, national insurance, make pension contributions or cover work related work costs I have never had so much discretionary spending or saving power.  Of course others may consider my personal level either on the high or low side depending on their own circumstances and needs.

My income is made up of my occupational pension, my state pension and a small annuity. One could say I maximise the benefit of my retirement income rather than the amount. ( which after retirement is somewhat fixed. Although I benefit from guaranteed annual increases.)

Organgrinder

If anyone wants to settle for what is in effect a fixed income there's nothing wrong in that.

Equally there is nothing wrong in taking advantage of free money if it's available and providing others the opportunity to do likewise.

It's all about choices. Your income at £35,000 or so is more than sufficient to meet your wants/needs. Indeed after tax it's over £10,000 more than your stated minimum to live reasonably. Hardly surprising then that you have no interest in pursuing extra. 

I have to build up a pot to meet not just my needs, but those of my wife. In order to retire early which is what we would like, we have to have a sufficient buffer at age 60/61 to last until state pension age.

As a result I will continue to seek ways to maximise our savings and at the same time help pay for holidays etc though bank switching, stoozing etc. And I'll continue posting about it too. I've learnt so much from other people and am grateful for it. That's what MSE is all about. :-)

jwil

Just delurking to say I like seeing both perspectives!  It's nice to hear what levels of income people manage to live on without having to do any more, but also that there are ways of supplementing or maximising that income as well.

SouthCoastBoy

As a couple we are planning to live off £2650 per month after tax, increasing with inflation each year. We have been doing this for a couple of years now and each year we have underspent. This amount does not cover one off capital expenditures such as car purchases, major renovations etc.

The majority of funding will come from a DC pot, although my wife does have a small DB pension of around 10k a year at 60, rising to 13k a year at 67, of which 4.5k is index linked the rest is lnked to CPI up to a max of 5%.

Plasticman

SouthCoastBoy said:

As a couple we are planning to live off £2650 per month after tax, increasing with inflation each year. We have been doing this for a couple of years now and each year we have underspent. This amount does not cover one off capital expenditures such as car purchases, major renovations etc.

The majority of funding will come from a DC pot, although my wife does have a small DB pension of around 10k a year at 60, rising to 13k a year at 67, of which 4.5k is index linked the rest is lnked to CPI up to a max of 5%.

Our plan is £3,590 a month after tax  (increasing with inflation) and, like you, we've been living off that comfortably. Ours should cover one off capital expenditure too - although we will still have a (modest) "pot" to call on if needed.

I'm lucky to have a good DB pension alongside our DC pots. Two years to go!

Organgrinder

From age 60, ours is about £3,400 a month after tax but that includes holidays and continuing to put money into the pension pot.

In order to do this we'll be drawing from our savings of what should be approx £100k until we reach SPA.

At that point we'll have a small surplus per month of approx £400 plus a pension pot of approx £120k - £120k.

We may choose instead to draw down on the pension pot and leave the savings aside. Much will depend on how things change in the next 2-3 years 

savingpennies

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

Organgrinder

savingpennies said:

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

Roughly half of my annual pensions transfer to my wife. From memory the actual figure is about £10k pa. In addition she will have her own pension of £7k pa. 

On the face of it that will make things tough till 67. If however I pass before I retire she'll get a lump sum of over £100k. 

In addition there will be around £100k in investments/savings and another pension pot of around £80k. 

And of course at 67 the state pension. At 67 her income would be £29k pa. From 60-67 she'd have £17k plus the ability to draw down on some £180k or so. Taking the equivalent of the state pension should still leave her with savings of approx £100k.

It's something I've made sure has been thought though.