How much to live on

Twixty3

This is maybe my favourite thread on the forum. It’s very relatable when you have pensions and early retirement on your mind. 

I hope to retire early in the next few years (maybe even in 2022) on roughly £14k  per  year made  up of pension and amounts  from the lump sum.  I can live on this.   I have no mortgage and no car or expensive hobbies.  Don’t really feel the need to travel anymore apart from visiting family and friends who are UK/NI based.  

Some from the lump sum would remain saved for the future.  

Ultimately I need to go when there is a VR package on offer.  If one was offered soon should I take it as it possibly may not be offered  again in my  current working life.  I am 59.   That is my dilemma.   I will see what happens.  

I am open to working a few more years and to part time work in early retirement.

The big concern currently is the rising energy prices but that will affect me even on my salary now.   I’m not a high earner. 

Once state pension comes I should have a higher income then plus another small pension of around £1k a year from a small deferred pension.   A bonus for hitting 67 years of age!   lol   

[Deleted User]

@Twixty3 Is that £14000 up to State Pension age and a bit more after? Sorry just realised you answered that in your post!

@hugheskevi I believe @thriftylynny has her funds in investments outside a pension.

otb666

Well last day tommorrow thanks for all the support guys Wish me luck 

[Deleted User]

@otb666 All the best with your plans!

moving_forward

Enjoy your freedom @otb666

michaels

[Deleted User] said:

As requested here is more detail about my income and expenditure in retirement.

Currently, my guaranteed pension income at age 62 is about £19250 a year. This is all index linked. In addition, I should earn (in normal times) about £1200 a year from examination invigilation.  

I currently have a casual contract with my former school until March 2021 working up to 2 days a week. Up until December this employment brought in an additional £650 a month after tax. However, I am currently working from home with greatly reduced hours. Most of this money I try to save. The contract may be extended from March, but even without it I can manage very well on my current pension income.

 I also make about £400 a year from Surveys and loyalty cards. This money goes towards Christmas presents and the festive food shop!

I am fortunate to be able to share bills with another relative. My share is just over £600 a month. I pay more than half as I have more income. This amount covers council tax, all food, household goods, fuel for both cars, utility bills, British Gas Homeserve and charitable donations. This Household account usually runs at a small surplus.

I set aside a further £350 a month into savings to cover the larger annual bills such as car insurance, car tax, car service, buildings and contents insurance, routine house maintenance, dentist, and various annual subscriptions.

I contribute £100 monthly to a low-risk S&S ISA which is growing steadily.

I budget about £250 a month for personal spends which covers such things as meals out, days out etc… I do not always spend this amount. (Especially now!)

I also send £100 a month to a back-up current account with another bank. I also use this account for Christmas and Birthday presents as well as personal clothing.

I have savings and investments of a few tens of thousands. Not loads I must stress! They are distributed between Premium Bonds, the S&S ISA, a Cash ISA, a regular saver, and a restricted access saver. I also have one instant access account that contains £1000 as an immediate emergency fund.

I have put together a budget and spending plans on an excel spreadsheet for the next four years until I collect my state pension at 66. In addition to regular bills and spends I have set aside an amount for travel and house upgrades. This money will mainly come from savings. I can adjust these as necessary

When my state pension becomes payable, (£9100 p.a. at current figures) I will have more disposable income! As I was contracted out most for of my career, I will need a total of 47 years NI contributions to get the full ‘new’ state pension minus a few pence. I am currently on Year 44! I will pay these contributions from savings if my casual contract work should end this year.

Hopefully the above may help others when planning retirement income and expenditure.

Of course to buy that £19250 pa from age 62 from a pension pot would cost about £1m - worth thinking about when you se ethose 'massive' pots mentioned on the pensions thread

Twixty3

[Deleted User] said:

@Twixty3 Is that £14000 up to State Pension age and a bit more after? Sorry just realised you answered that in your post!






'

Yes    I will be on almost £2k a year more after tax from age 67. I could take the other smaller pension earlier too but have decided not to. I have planned this so that reaching 67 brings in a small change in income just to mark the change in some way.   I am weird!

If I need more than £14k a year before then I will get a part time job  (or trim the budget) rather than use up any more savings/remaining lump sum ( this won't be huge but hopefully adequate especially if kept for essential repairs and that only).  

At the end of day if it does not go quite to plan I will not be existing on state pension only and I marvel at those who do manage on that or less. I can adapt too if required.

[Deleted User]

Actually @michaels with a drawdown rate of 3.5% per annum I would need a pot of just over 500000 and not 1 million as you suggest. 

Furthermore about 600 of it per year comes from a small annuity.

runningromani

@otb666 all the best for your retirement I won’t be too far behind you, mid Apr (subject to my pension figures matching my expectations) how do you feel? I had a letter today confirming my retirement from our HR Dept (no pension figures yet) and starting to feel a bit real now. 

Farway

Twixty3 said:

This is maybe my favourite thread on the forum. It’s very relatable when you have pensions and early retirement on your mind. 

I hope to retire early in the next few years (maybe even in 2022) on roughly £14k  per  year made  up of pension and amounts  from the lump sum.  I can live on this.   I have no mortgage and no car or expensive hobbies.  Don’t really feel the need to travel anymore apart from visiting family and friends who are UK/NI based.  

Some from the lump sum would remain saved for the future.  

Ultimately I need to go when there is a VR package on offer.  If one was offered soon should I take it as it possibly may not be offered  again in my  current working life.  I am 59.   That is my dilemma.   I will see what happens.  

I am open to working a few more years and to part time work in early retirement.

The big concern currently is the rising energy prices but that will affect me even on my salary now.   I’m not a high earner. 

Once state pension comes I should have a higher income then plus another small pension of around £1k a year from a small deferred pension.   A bonus for hitting 67 years of age!   lol   

Your plan and circumstances sound just like mine was way back pre 2000, I just wanted out but couldn't see a way to get there despite savings & investments they were just not enough to tide me over until SP kicked in even though it was 65 then,

Like you I was fingers crossed for VR, which then came along and my package was ideal being a long time drone, grabbed with both hands, it was around the £30K mark and I left in June 2003 age 60, my SP started 2008 so I was living off capital for five years but I had done my sums and it worked out fine with less outgoings, and once SP + SERPS etc arrived I was "earning" more than I had while working because, also like you I was not a high earner but had access to overtime which I clocked up whenever opportunity arose and a cunning plan to get out

I remember my work mates smiling at my battered old Cortina and asking why I didn't get something better. Then them wondering how I could afford to leave work five years early. I don't think they ever put two & two together

I've managed several holidays, UK based coach ones mainly seeing UK places I'd wanted to visit but never had, like Hadrian's Wall etc  I'd already seen a lot of the world anyway with previous employer & RN so never wondered about missing foreign parts

My point is, if you can go for it!, I've had nearly twenty years retired now, wiht my health and mobility slowly getting worse which makes me doubly glad I went early and enjoyed it while still able but even now I don't sit and fret, plenty to do that doesn't require full health

best of luck to you