How much to live on

drummersdale

chubsta said:

Thanks very much for this thread, i have read through the whole thing (whilst at work!!) and it has been a real eye opener - as many have said the main threads on the forum seem to relate to people with huge wages/savings/pension pots which can give the impression you need a huge amount to retire, whereas many here are doing very well on much less.

I am currently hoping to retire at 58, which would give me a pension of about £21000 PA and a lump sum of around £48,000 - i dont have any savings at the moment as am trying to pay my mortgage off early so will have no debts once that is gone. The things that is running through my mind is that if i wait until i am 59 then the pension will be around £24,000/52,000, or if i wait until 60 then about £25000/54000, so a couple more years will make a big difference. However, i have worked shifts since i was 18 and they are literally killing me, nights in particular are so hard to get through and i hate to think of the damage it is doing to my body so would really like to go as early as i can.

My monthly expenditure, minus everything that i wont be paying out when i retire, including food, petrol etc comes to between 900 and 1100 per month at the moment (we have two dogs and they cost around £250 per month to keep in the luxury they expect...), everything else i earn goes on the mortgage. Once the mortgage is paid off at the end of this year i intend to live on what i would get if i retire at 58 and save the rest - this will hopefully show me that an income of around £1600 per month will be easily enough to live on until i get the state pension at 67.

Until reading this thread i was a little worried i wouldnt have enough to go early but now feel that i will actually be pretty well off...

Hi Chubsta - this could be a stab in the dark but it sounds like you are Civil Servant like myself (or public sector at least) so like you I have been "doing the numbers" to determine whether I should go at 59 or 60 - although I am looking to go part time initially as my wife is 5 years younger than me.  I also agree with @helensbiggestfan that I don't want to do the "I'll wait another year" thing to suddenly find I am too old to do what I would like or my health takes a turn for the worse.  I'd rather have a few years to use the fruits of 40 years pension enjoyably and whilst our daughter is still interested in going on holiday with us before I take it a bit easier.  Whatever decision you end up making I hope it works out for the best.  Kind Regards

Gin_and_Milk

This is a great thread.  I regularly look at the pension planning section of the forum, and the numbers are jaw dropping.
I'm 46, and whilst I'd love to retire sooner, 60 would be a realistic age to go.  I'm on target to retire on a DB pension of approx £19000, which (I think) will give me about £1400 per month.  I'm also paying £100 p/m into an AVC through sal sac, as well as £100 p/m into vanguard life strategy.  I have a small number of shares which aren't really doing anything at the moment, but I don't particularly need them to either just yet.

chubsta

Thanks for the encouraging replies, bringing some reality to my situation by comparing to others has really made me think (as if I don't think about retirement enough as it is...)
Work is a strange one for me in that I don't mind the job - the main role I do is very technical and 'full on' and the majority of people find it extremely stressful, to the point of trying to do everything they can such as occupational health referrals to prevent them from having to do it, personally I find it really easy so it isn't an issue for me. What is an issue is actually having to go to work, which stops me doing so many things I want to do, plus working shifts is a killer - for instance I am currently on 12 hour night shifts for the week and get no more than 3 hours sleep a day so by the end of the run I am pretty much on my last legs.

I have looked at options such as part-time etc but the financial hit is too great at the moment to be viable, so am looking at staying as I am until I retire. I am 55 next month and I think I can cope with another 3 years, it is whether I can do another 4 that is really the question. Despite the lack of sleep when on nights, which I am kind of used to as it has been like this for at least 10 years, 9-5 isn't an option as even though I hate shifts I still prefer them to 9-5 Monday to Friday!

I have been with my partner for 16 years but we still have separate houses ( we kind of move between the two - of course this means we have two lots of bills for everything) and are completely financially independent, this may seem strange to some but works for us. She is 8 years younger and doesn't work because she lives off investments etc so there is spare money there should anything ever get tight, and we would have the option of selling a house or just downsizing one of them, but I wouldn't want to do that really.

So, for my point of view, retirement is about having enough to do what I want to do, which isn't expensive - I hope to take up fishing again as I loved it when younger, walking the dogs in the countryside is our main passion and we only ever holiday in the UK (I saw pretty much every part of the world I wanted to when younger). Any work that needs to be done to the house such as a new boiler etc can come out of the lump sum, and I am not one for driving around in expensive cars. The dogs are quite expensive to have as they are both rescue lurchers who were terribly treated before we got them so we do the very best for them and also need to put around £100 by every month for vets fees should they have an accident. I can see myself doing voluntary work for a day or two a week at the local RSPB as that is something I am very interested in taking on when I have more spare time - again, it is something that doesn't cost anything but will keep me active.

For many years I have operated a spreadsheet every month for my income/expenditure so have a long-term and very detailed idea of where the money goes, I think this is invaluable.

@drummersdale - what gave it away? was it the pension forecasts or the fact I managed to read a 34-page forum thread whilst at work (even though we were extremely busy last night - you just have to prioritise!)

Having read this thread I am confident I can go at 58 and live quite well within my normal limitations, until reaching the SP age of 67

MovingForwards

For those of us who will have state pension and a bit of private pension, it's worth having a quick look on a benefit calculator to see what extra might be available, subject to future changes.
Obviously you'll have to do it as if it's SPA now and things may change, but it may be a surprise to see potentially some entitlement and maybe assist with taking a little extra from pensions during early retirement.

I've decided to base my working PT by date on the earliest I could access my SIPP.
My mortgage will be paid off within 9 years as I'm currently paying an extra ³/4 of the contractual payment as overpayment each month.
The money that then frees up (contractual and O/Ps), saved for 3 years will provide me with 4.8 years outgoings. Add in everything I've saved to that point and who knows, maybe the PT and ER date will end up being the same. 

annielyn

Love this thread and have been a lurker for a while. DH decided around 5 years ago (at 56) that he'd had enough of working (physical job and shift work) and he wanted to retire. Long story short, he got his figures, decided we could make it work and was gone within the year. Prior to that we had done no planning for retirement other than he was contributing to his company scheme. (Naive I know but he honestly hadn't thought about going early until the job became too much for him). He took his lump sum put it into drawdown and we calculated on a monthly withdrawal of £1,100 to supplement my small part time income of around £500 pm giving us just under 20k pa which will cover our day to day living expenses.
 In reality our annual expenditure has been nearer 27k supplemented from savings and the occasional lump sum from drawdown. However, this is because we have spent the last few years since his retirement future proofing our bungalow (new double glazing, gutters and facias and central heating system) We've also 'invested' in a static caravan on the coast around 40 minutes away which has come into its own over the last year. Yes they can be a money pit but we look at it as a life style choice spending half our week at home and half at the caravan and we wouldn't change it for the world.
We have 4.5 years until we both get SP and have sufficient savings that if we need to supplement our annual income at the same rate until then we can manage it.
You can plan as carefully as you like but sometimes life happens and you have to roll with it!

tichtich

Sorry if this sounds alarmist, but I would think very carefully before retiring earlier than you have to, given the current economic conditions. These conditions are--in some respects--different from anything we've seen before. No one really knows what's going to happen in the coming years.

It's possible that there will be high inflation, so you should not rely heavily on a fixed annuity,  which will be devalued by inflation. (I have a small fixed annuity myself,  so I really hope there won't be much inflation, but I'm not relying on it.)

Also, be wary if you are relying on a pension pot or other money that's currently invested in the stock market. The stock market is very highly priced at present, which means that the current valuation of your investments (at current share prices) is probably overstating their true long-term value.

If you don't fully understand your retirement finances, then I would definitely get good advice before retiring early, and a second opinion. 

Farway

tichtich said:

Sorry if this sounds alarmist, but I would think very carefully before retiring earlier than you have to, given the current economic conditions. These conditions are--in some respects--different from anything we've seen before. No one really knows what's going to happen in the coming years.

It's possible that there will be high inflation, so you should not rely heavily on a fixed annuity,  which will be devalued by inflation. (I have a small fixed annuity myself,  so I really hope there won't be much inflation, but I'm not relying on it.)

Also, be wary if you are relying on a pension pot or other money that's currently invested in the stock market. The stock market is very highly priced at present, which means that the current valuation of your investments (at current share prices) is probably overstating their true long-term value.

If you don't fully understand your retirement finances, then I would definitely get good advice before retiring early, and a second opinion. 

I think if you look too hard at the future you'll never retire

I retired [via voluntary redundancy, private sector] in 2003, bottom of the stock market, in fact I just squeaked in cashing my endowment at a higher level, it had dropped the weeks before but my application just beat the deadline with a higher valuation

Five year later 2008 it was the financial crash which reduced the value of my shares, and of course a panic with building societies and Icelandic Banks where a lot of my cash was stashed, luckily I was not alone and we were bailed out by the taxpayer, with new regulations coming in for today's savers

2008 was also the year I started collecting the State Pension and I won't deny that is my bulwark and main income these days [no private pension], luckily I do get the pre & post 1997 additional State pensions, never having opted out

Post clearing my mortgage and  Pre retirement I had built up a selection of income bearing shares, some of which went phut, like GEC / Marconi, Lloyd's Bank and even Tesco along the way so not minnows, very much Blue Chip, I had planned these as fall back sale if required plus income in the meantime

Dividend income vanished from some, others, like Tesco & Lloyd's, are just coming back up now, but post Covid and possible inflation bubble building who knows what dividends will be? Hence the wide spread and plenty of egg baskets

My point is, if you can do it go for it, there is never going to be a "right time" but as long as there's a nice cash buffer, in different pots, there is no reason not to give up work, more so if every day is a PIA once the alarm goes off

I was also one of those who had a job, pleasant & lucrative at times but not a career

[Deleted User]

Wonderful post Farway! No decision is risk free. You make the best one possible for yourself depending on your needs. These needs may not always be financial. Good health and quality of life is so important.

vulcanrtb

tichtich said:

The stock market is very highly priced at present

If this was a fact, people and institutions would be acting on it. Nobody knows what's happening next, if they did they'd possess the ability to make infinite amounts of cash.

203846930

I had my annual review chat on the phone with my FA and she was full of praise for the way I chose to do my retirement.
Now into my 6th year and still showing no signs of heading to the foodbank for lunch.
She did pursuade me to let them manage my funds slightly riskier to make the fund last longer and also let me know that I still have about 10% of the fund available tax-free if I needed it, I settled for an increase in my monthly drawdown to cover for inflation and if the change in the managed funds work I may do the same next year.
All is rosy in my retirement garden at the moment, all I need is some teeth to enjoy the fruit