How much to live on

PennyForThem_2

State pension - check but I think it is frozen forever once taken unless the new trade agreement has addressed that.

mummytummy

I’ve got 7 years before state pension and hoping to have settled back in UK by then, Australia isn’t for me I’m afraid, I’d have returned within a year had it have been solely  my choice 😂

[Deleted User]

I spent some time yesterday doing a little re-organising of my savings accounts. I opened two new savings accounts, one for travel and holidays and one for voluntary NI payments. I have also set regular standing orders to send money to both accounts from my main current account. My second current account will continue to be used only for birthdays,Christmas, clothes and the dentist. This is also ,fed, monthly from my main current account. 

Another savings account will continue to receive monthly deposits to cover the annual bills such as car insurance, car tax, car maintenance, house insurance and house/garden maintenance as well as a couple of subscriptions. One other account will now be topped up to 5000 once my regular saver finishes in April, and will be my designated Emergency Fund. 

My S&S ISA and Cash ISA accounts remain unchanged as does my Premium Bond Allocation.
I am considering stopping all paid work at the end of April and have reviewed my plans to ensure it is doable and that my accounts reflect my needs.

I have made no final decision but will do so in the coming weeks. 

My NI payments for 2021/2022 should be almost covered by part time employment. This will leave me to fund two more years of voluntary NI payments to ensure I get the full new state pension minus a few pence. In total I will have  made 47 years of NI payments by April 2024. I was contracted out for 34 of those years. Very fortunate to be able to make up the difference to ensure a good state pension, which starts for me in July 2024.

moving_forward

Sounds like a plan @[Deleted User] 🤞

[Deleted User]

I have been thinking that perhaps we ought to make more people, who are typical potential retirees, aware of this thread. I worry that some venture onto the main pensions board (as useful as that can be) and get an unrealistic view of what is needed. Likewise people can feel financial failures (I know I did for quite a while) when they see some of the numbers being discussed. However recently some of the enquiries have been quite interesting and realistic. 

I think people also need to know about the non financial aspects too. By definition the pensions board is about maximising financial benefit. Perhaps this needs a bit of balance. 

I have already provided a link to this thread to a couple of people who are undecided about retiring. I think it is allowed to do so! Come to think of it quite a few over 50s (and indeed younger) from other MSE Forum Boards may also find this place useful.

Any thoughts from anyone else?
Another reason for asking is that since the boards and threads were re-organised we are a little more difficult to find. 

moving_forward

I believe it's of help to people not yet approaching retirement but also forward planning and trying to get more of an idea about spending like myself. The information is invaluable to getting current spending under control so you can then plan for what you will need in your retirement years. I do browse the pension threads but even as someone who works in finance some of the sums and general language used are mind blowing. 

Roger175

I've spent the last few weeks gradually chewing through this entire thread and thoroughly enjoyed reading everybody's views.

What it does reinforce is just how varied people's circumstances/lifestyles are and hence the different income requirements in retirement. It reflects society as a whole and clearly there is a huge range if you look at the population of the UK. Salaries in this country range from minimal wage (or less if you are on benefits etc), through to people earning hundreds of thousand per year (more in extreme cases) and as we know, people tend to live to their means, so somebody living in a large house with posh cars and lots of holidays etc, is unlikely to move to a mid terrace house and start catching the bus - hence the reason some people post about needing what seems like eye-watering sums, when others would be happy with a fraction of that. The one thing we all have in common is that we all get older and most of us want to retire at some point - one could get into the issue of life expectancy based on social factors etc and clearly there are some people who appear to not want to retire for various reasons. The thing is, to decide at what point you've had enough and whether you are in a position to retire based on the provisions you've put in place.

In our case, both me and my wife are broadly the same age, she's 58, I'm about to turn 58. We had always assumed we would work on into our early 60s and whilst we hoped to retire before SPA (67 in our case) we thought it would only be by a few years. Covid has changed all that for us and caused us to look at our position and it is very evident that we can go now and live very comfortably. My wife has already given notice and goes at the end of the school summer term and I will probably do another year - the reason for this is simply that I am self employed and work as a construction professional - I can't just retire overnight due to the nature of the business and ongoing commitments, so I intend winding things down before finally finishing all my projects and then going - no bad thing in a way and I will also have the opportunity to take on a few extra bits and pieces if I feel inclined. 

In our case it has been very difficult for us to appraise our position for the last 5 years as we have been building a self build house (true self build - me doing practically everything) and this has meant that our finances were very mixed up for a long period and we have only really settled back to a stable position in the last year - this has allowed us to take a long hard look at things and we've realised it's a lot rosier than we realised, not least because we managed to retain a chunk of equity in our former home, which we had not intended at the outset - this gives us a secondary income in the form of rent. Even so, I don't think we ever looked at things in the right light - when considering early retirement (assuming your needs are relatively modest and you are expecting full SPs), you only really need to be looking at how to plug the gap until SPs kick in.  OK, you may need more than SP (we do, we reckon closer to £30kpa), but at age 67, £19.5k of that will come from SPs, which makes a huge difference. 

Enough rambling! - Our figures are here if anyone's interested 
https://forums.moneysavingexpert.com/discussion/6329254/thoughts-on-our-early-retirement-plans

MovingForwards

I do plug this thread on the pensions board, especially when there's people with smaller / no pensions fretting.

thriftylynny

 Baron_Dale , in answer as to whether i decided to top up my income from investment ..i did give it some thought  to possibly withdraw a safe recommended UK limit of 2.5% which would have given me just under 2.5k or an extra couple of hundred a month & did think okay i can do that especially as investment had increased over the year ..put it  off though as partner  got a min wage part time job all be it temporary, which has been helping. However  just gone online to check how my investment is doing & it's actually losing big time (5k ) due to volatility in markets, Daren't even venture to ask anything on this subject on the investment thread , i am well aware of risk, asset allocation etc & thought i'd done my homework ? Now not sure.. at 62 do i have time on my side to take these risks with my entire life savings & ride the storms until things pick up, that's my biggest worry ? I was  pinning my hopes too much  i think that the  investment would be sufficient to allow a 2.5 -3% withdrawal for rest of my days without me  worrying about eroding too much capital?. But i suppose that's what investing as about !   Like MovingForwards just pointed out this thread is so nice for ordinary  people like me ..who do fret about such things & maybe aren't as clued up on such matters !!  

hugheskevi

thriftylynny said:

at 62 do i have time on my side to take these risks with my entire life savings & ride the storms until things pick up, that's my biggest worry ?

A lot depends on exactly what you plan to do with the pension. Back in the days when it was usual to take 25% cash lump sum and buy an annuity you would start to move into lower risk investments 5-10 years before buying the annuity. 

Nowadays it is much more common to either take 100% cash or to withdraw investments over a much longer period. 

When planning to withdraw over a much longer period, some of the assets will remain invested for (hopefully) 20+ years, which means a higher level of investment risk can be taken. What you are basically doing is matching investment horizon with investment risk, and considerations of whether you plan to take a 25% tax free lump sum immediately (drawdown) or take tax free cash over a number of withdrawals (UFPLS) will affect this consideration.

So it wouldn't be at all surprising to see equity holdings of 33-50% or more close to retirement for someone planning on drawing the investments over decades.