How much to live on

robinwales

 I work out our budget on a Google sheets setup. It covers the total monthly/yearly costs as well as any major capital items such as new car, major projects etc. We are retired, mortgage free, one car, no children/grandchildren, and there are just two of us. Our total projected spend for the (hopefully) remaining 25 years of life is £1,200,000 which is £48,000 a year. Our net income from pensions etc is £54,000 a year. We also have about £700,000 in savings and an allowance for future equity release which we want to take out. So my answer is £48,000 a year.

DairyQueen

robinwales said:

 I work out our budget on a Google sheets setup. It covers the total monthly/yearly costs as well as any major capital items such as new car, major projects etc. We are retired, mortgage free, one car, no children/grandchildren, and there are just two of us. Our total projected spend for the (hopefully) remaining 25 years of life is £1,200,000 which is £48,000 a year. Our net income from pensions etc is £54,000 a year. We also have about £700,000 in savings and an allowance for future equity release which we want to take out. So my answer is £48,000 a year.

Attempting to work-out total costs over the rest of your life is an impossible task.  Date of death is one of the big unknowns in every retirement plan. Income requirement is usually based on projections of current expenses against various inflation scenarios, and a separate pot/allowance for capital costs. Inflation won't be linear and is another unknown. Ditto investment returns. Ditto tax.

Your calculation excludes inflation and assumes linear drawdown. At 2% inflation £48k today would require £58k in 10 years and £71k in 20 years to maintain the same lifestyle. Even if you both happened to live exactly another 25 years and maintained the same lifestyle throughout you would expect to spend a great deal more than £1.2M.

If your income streams are all guaranteed and are all uncapped inflation-linked, then you have your annual expenses covered with plenty of contingency and without requiring much in the way of planning or management. This is not the same as an income partly/all dependent on investment returns. A pot of £1.2M would be at serious risk of running dry in your lifetime with an initial withdrawal of £48k net unless carefully managed using some kind of strategy. That's well over 4% allowing for an element of income tax.

You are in a very fortunate position to be on this level of retirement income. Doubly so if your income is all guaranteed and inflation-linked. If OTOH you are dependent on investments to some degree then I think you would benefit from talking to an IFA.

Keep_pedalling

We are fortunate to have £40k indexed linked income from DB and state pensions, but currently expenditure is nearer £60k. We could comfortably live within the income, but a big part of of our expenditure is gifting, both to charity and family. The shortfall comes from our savings, which apart from an emergency fund (premium bonds) are held in our S&S ISAs.

If we died tomorrow our estates would be subject to a hefty IHT bill, but we have factored in the possibility of either or both of us needing care in our long term financial planning. and if that happens we want the best we can get, preferably through live in carers rather than residential which is very expensive, so we don’t want to run the savings down to totally avoid IHT only to limit our choices for care.

PennyForThem_2

Umm - your post resonates.  My father (wealthy, NHS consultant pensioner) lived since aged 65 in Australia - which was a spectacular deal for us UK children inheriting - especially as Australian gov paid towards his live-in carer.  However he had room to accomodate the live-in carer with a parking space allocated to her.  No inheritance tax in Australia!

Balancing income with 'maybe' care costs and at the moment definite IHT and give-away to children is really, really difficult.  I am hate spending and have to make an effort to spend.

maisie_cat

Dizee123 said:

We have now reached our annual 'argument time' of when to turn on the heating.  My partner likes to just wear a t-shirt and have the heating on, whereas I like to wrap up in layers and wear jumpers when it is cold.  Cue discussions on 'wasting energy'.  This year, after watching the news on energy costs, he has actually dug out some tracksuit bottoms and a top to wear......every cloud and all that.....
I have also become addicted to checking my smart meter a few times a day.  The last couple of days the electric usage has increased, so I started some detective work initially thinking the seal on the fridge freezer had gone.  This morning the cause became apparent with two dead fish in the aquarium due to a faulty thermostat.  Luckily the others have managed to survive the almost 10 degree temperature increase.  I'm glad to have solved the energy issue, but just wish it wasn't one of my favorite fish that provided the clue.

We are exactly the same, he turned the heating on yesterday evening so our bedroom was too hot for me last night and I couldn't sleep. Drives me mad! but then I am currently sitting here in shorts and t shirt (I been re-oiling worktops) and he is in tracksuit bottoms and a fleece. My argument is that it's easier for him to put clothes on, but once I'm naked I cannot get cooler! Luckily we have no neighbours!

PennyForThem_2

Wait til the heating bill comes in then you have a fiscal argument/advantage

otb666

well got my end date now only 9 weeks to go.  Feeling very weird about it.  Its definitely what I wanted  but just feeling a bit lost now.  Every one keeps asking what I will do and that freaks me out a bit.  Love this thread always read it first

Farway

otb666 said:

well got my end date now only 9 weeks to go.  Feeling very weird about it.  Its definitely what I wanted  but just feeling a bit lost now.  Every one keeps asking what I will do and that freaks me out a bit.  Love this thread always read it first

People do this, but once you've retired you really do wonder how on earth you managed to fit work into your life

RetSol

Farway said:

otb666 said:

well got my end date now only 9 weeks to go.  Feeling very weird about it.  Its definitely what I wanted  but just feeling a bit lost now.  Every one keeps asking what I will do and that freaks me out a bit.  Love this thread always read it first

People do this, but once you've retired you really do wonder how on earth you managed to fit work into your life

Absolutely.  And the reason that they are asking is that they are freaked out at the thought of retirement themselves. 

Better not to have any plans, I say.  Allow yourself to feel lost and whatever else it is that you are feeling. 

Lately, I have been experiencing feelings of failure about my career.  It lasted 30 years so it couldn't have been that bad.  I have had similar feelings in the past when ending something and I know that the feelings will pass. 

The only way forward is through.  Something new will emerge, if you allow it. 
 

blue.peter

otb666 said:

well got my end date now only 9 weeks to go.  Feeling very weird about it.  Its definitely what I wanted  but just feeling a bit lost now.  Every one keeps asking what I will do and that freaks me out a bit.  Love this thread always read it first

In a way, it's like leaving school. Well, it was for me. I was happy at school, and didn't really want to leave. At the same time, though, I knew that my time there was over, and that I should move on to the next part of my life. 40+ years on, I still look back at my schooldays and see that they were good. But that's all: I've no regrets. Similarly, I've no regrets about retiring. (OK, I was pushed into it a bit by redundancy, but it was what I wanted anyway.)

As for what you'll do, you can do whatever you like, be it voluntary work, learning, playing sport, or just loafing around. What do you enjoy? You've got time for more of it now, and time to take up new things if you want. If you want ideas, find other people who've already retired and talk to them. Someone might say something that sparks a thought in you. Your time will be your own, with no manager or customers telling you what to do. Don't worry about it. Enjoy it!