How much to live on

blue.peter

mummytummy said:

Experts say £10,900 annual income needed to retire https://www.bbc.co.uk/news/business-58883053

"...For a minimum standard of living". That's a huge caveat and, in any case, the folk who produced the calculation have made all sorts of assumptions about spending. Not everyone means the same thing by "a minimum standard of living". Those assumptions might very well not be correct in your case. The actual amount needed will vary enormously from one person to another. I know that I'd find it very hard to live on less than about £16,000 a year (I'm single). And that's without a Netflix subscription  Oh, and that £16,000 ignores the recent massive increase in energy prices

I'd suggest that you think not about studies like this, but about your own actual spending. Do you want to maintain that in retirement or are you willing and able to make cuts?

DairyQueen

This links to the actual PLSA report and provides more detail. It is clearly intended to create awareness, and to encourage people to engage with the subject of income in retirement, rather than provide a prescriptive 'number' for individuals. Caveats are described and information provided on how results have been calculated (research based on interviews with retirees).

In particular, those with sufficient patience may find the section on the impact of Covid interesting. 

Bravepants

DairyQueen said:

This links to the actual PLSA report and provides more detail. It is clearly intended to create awareness, and to encourage people to engage with the subject of income in retirement, rather than provide a prescriptive 'number' for individuals. Caveats are described and information provided on how results have been calculated (research based on interviews with retirees).

In particular, those with sufficient patience may find the section on the impact of Covid interesting. 

Hmmm...earlier this year I used the previous figures for a couple from PLSA in my spreadsheet (15,700, 29,100 and 47,500, respectively minimum, moderate and comfortable), to compare our Number against these, all uplifted for an assumed 2% inflation per year (I use this as an average as it is what the BoE use as a setting in their control system).

The new figures from PLSA seem to correspond (roughly) to the increase in the old figures uplifted by inflation to the year 2024. So, not only are the previous figures out of date, they are also out of date in the future assuming BoE inflation. So these figures should be used with caution for future planning too. 

MovingForwards

The average figures being passed around are interesting, for people like me, assuming it's 'take-home' income:

15,700 not much less than my THI is now, only I've got the usual work related expenses, mortgage, savings, private pension I'm funding.

29,100 is more than my highest ever salary.

47,500 is even more than my highest ever salary.

The average doesn't help those of us on lower incomes and in some cases can cause a lot of worry, resulting in people thinking they cannot ever give up work.

In basic terms:

Everyone needs to check and fully read their state pension checker.
Work out their potential outgoings on retirement and if there's a gap work out how much they need to save each month.
Pretend they are retired, do a benefit check (on entitled to etc) and see what may be available to top up income / pay rent.
Cross reference everything.

moving_forward

As a 46 year old I have found the previous posters link to the website extremely useful.
I downloaded the spreadsheet with the minute detail and am in process of using it along with our own figures to gauge our current budget against current income with the intention of updating regularly. Being a nerd type I am fascinated by the research done in reaching the estimated spends and it has certainly enabled us to look at our own areas of overspending and get a grip on these whilst saving for retirement.
I look forward to the 2021 figures being published and cannot thank enough the original contribute who first mentioned the site.
P.s. I am moving_forward not to be confused with @MovingForwards who posted above 😊

drummersdale

I reached a bit of a milestone a couple of days ago of 40 years in the Civil Service so have found myself being increasingly interested in this forum as I am hoping to take Partial Retirement next year (around June) if agreed by my current employer.  I know the issues surrounding the McCloud judgement are yet to be determined but on existing salary I reckon my pension will be around £25,000 and my lump sum 3 times that - I will be looking to work 3 days a week until my wife is ready to go (she is a CS as well but 5 years younger) so I imagine that puts me in the middle to higher category.  I am hoping to use some of the lump sum to get the house in good order and perhaps pay off a few bills and then start saving a lot more in readiness for when my wife decides to go - she will also get a lump sum and pension but is a lower grade and part time so hers will be a lot less - although the tow combined should ensure we are reasonably OK.  Some great ideas on this forum about keeping records of outgoings for a year or so to see exactly how much you do need and what you can actually do without.

missile

Sounds like a great plan. 

RetSol

 I reckon my pension will be around £25,000

Go for it, @drummersdale.  I am ex-civil service. 

You are a long time dead.  I took my CS pension early a couple of years ago and I now have some lived experience. 

I have got much better at understanding and monitoring my income and outgoings over the last couple of years.  

In addition to my CS pension, I have (thanks, in part, to MSE) a couple of sources of passive income.

Plus, I have some active income from self-employment.

And, it's all fine. 

Good luck. 

drummersdale

Hi @RetSol thanks it’s good to hear from someone with similar experience - my plan (if you can call it that) is to work Tuesday Wednesday Thursday for a few years until my wife is ready to go - by then even with her previous part time years she should also get a reasonable lump sum plus a small pension - albeit still probably around £15k - so we can hopefully bank her lump sum - as we are hoping to use mine to get some work done to the house etc - and then with our combined pensions be fairly ok by what are deemed to be “comfortable” standards.  There can be various rocks in the road to stop this of course but everyone has to dream!

MovingForwards

Slight change for me, I'm shortly about to start a role back in the private sector.

I assume I'll get some form of letter about the DB pension I'm leaving and would hope it automatically tells me the transfer value as I've only a short service with them.

The urge to take early retirement washed away as quick as the resignation email went out, although I'm still following the spirit of my plan and called it "keeping my options open".

I'm using the rest of this tax year to finish paying my car off, boost my savings a bit, pay a bit into my SIPP and have already worked out my 2022 finance spreadsheet.

My new role has a DC pension and I'll get to find out who with and other details when I start, we each pay in 4%.

As with my earlier posts one full SP, as at today's amount and my (our) outgoings, is still more than enough.