How much to live on

PennyForThem_2

[Deleted User] said:

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. 

You need to approach the influential/influencers on the Pensions Board by private message/post maybe.  Make them aware and your concerns. 

I am 'rich' by luck and doing nothing, but I also understand how intimidating that Board is, because many of them are well-off and ultra motivated to increasing their wealth and also a bit nerdish, so their expanations are difficult to understand.

I could not live on an income below tax level or even one below average wage level, even as a singleton.  I admire those that do, but this thread is a much more reaistic advice thread for those that, for whatever reason, want advice to do so.

michaels

[Deleted User] said:

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.

Actually whilst 3.5% in the UK is probably at (the top of?) the SWR level for the UK this is based only on a limited set of historic data points and is certainly not a guarantee of keeping up with inflation which you get with a DB pension so the better comparison is against an annuity which is likely somewhere in the range of 2-2.5% unless you are unlucky enough to have adverse longevity indicators.

Twixty3

Farway said:

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

Thank you @Farway.

It's a bit scary especially when you read what others have but I will not be too far off take home pay after which helps the decision massively. 

Just need work to get in line with my plans at the right time and not chicken out.

otb666

@runningromani Feel a bit surreal even though long time coming.  Found the pension implementation process quite hard work but that just me.  I will be glad once pension starts hitting bank account and received lump sum.  2 years ago this would not have been possible but with both of us receiving severance package and this thread realized we can get off hamster wheel.  Nodded off this evening and had a panicky dream about work When i woke up and realized I did not have to go anymore the relief was good.  I have fixed fuel prices and sky for two years so hopefully be OK

drummersdale

Congratulations @otb666 I’m a little bit behind you and @runningromani looking to go partial from August - have had the all clear from management to apply so just working out the numbers to try and avoid abatement - 2 and a half days a week seems the magic number for me - hope you both enjoy your well earned retirement and have many years spending your pension!

bluenose1

I am a regular on Pensions Board and have learnt so much over the years, especially as hoping to retire in next year or so at 56.
It can be confusing, though in my experience everyone is mostly really helpful.  Though  I have no interest in stocks and shares etc as my DC pot is in cash as I will spend it in 4 years whilst I wait for my DB Annual pension  to start.
A good site if you are trying to work out what you will have in retirement is  guiide.co.uk  as it is user friendly and it can help you work out if you are expected to achieve your required pension income. You just put in your age, expected retirement age, income etc and it profiles what you are likely to have to live in. I keep changing what date i will work to to see my different options etc.

Tips I have learnt form Pensions Board.
1. The £2,880 you can put in a SIPP after you retire per year to get  free cash from tax man.
2. Consider effect of cashing in DB pension as guaranteed income is often more valuable in long run.
3. Consider the effects of inflation on all your plans as doing that made me realise may not be worth taking my pension earlier than 60.
4. If you are still working the benefits of Salary Sacrifice. i never used to know that for every £68 I gave up in salary a £100 would go in my pension pot. This has been a game changer for me and allowing me to consider retirement 4 years earlier.

Roger175

bluenose1 said:

I am a regular on Pensions Board and have learnt so much over the years, especially as hoping to retire in next year or so at 56.
It can be confusing, though in my experience everyone is mostly really helpful.  Though  I have no interest in stocks and shares etc as my DC pot is in cash as I will spend it in 4 years whilst I wait for my DB Annual pension  to start.
A good site if you are trying to work out what you will have in retirement is  guiide.co.uk  as it is user friendly and it can help you work out if you are expected to achieve your required pension income. You just put in your age, expected retirement age, income etc and it profiles what you are likely to have to live in. I keep changing what date i will work to to see my different options etc.

Tips I have learnt form Pensions Board.
1. The £2,880 you can put in a SIPP after you retire per year to get  free cash from tax man.
2. Consider effect of cashing in DB pension as guaranteed income is often more valuable in long run.
3. Consider the effects of inflation on all your plans as doing that made me realise may not be worth taking my pension earlier than 60.
4. If you are still working the benefits of Salary Sacrifice. i never used to know that for every £68 I gave up in salary a £100 would go in my pension pot. This has been a game changer for me and allowing me to consider retirement 4 years earlier.

Bluenose, some great tips there. I also agree www.guiide.co.uk is a fantastic place to start your retirement planning journey, although a couple of problems with it are that it is only set up for individuals and not couples and it only works if you are already age 55 or above - if you really want the bees-knees then the trial version of Voyant is far more involved and gives the position for a couple at any age. I don't recall either of these two fantastic pension calculators being mentioned in this thread, but I would urge anyone to give them a try, they were quite an eye-opener for us and finally made us understand how all the pieces of the jigsaw would drop into place, mind you our joint situation (as a couple) is somewhat complicated with a combination of DC and DB pensions, Isas, Cash and rental income - it is difficult to get your head round it until you see it set out in a calculator.

Dragon_Lily

otb666 said:

@runningromani Feel a bit surreal even though long time coming.  Found the pension implementation process quite hard work but that just me.  I will be glad once pension starts hitting bank account and received lump sum.  2 years ago this would not have been possible but with both of us receiving severance package and this thread realized we can get off hamster wheel.  Nodded off this evening and had a panicky dream about work When i woke up and realized I did not have to go anymore the relief was good.  I have fixed fuel prices and sky for two years so hopefully be OK

I'm ahead of you by a few months .  I retired at the end of December 21. It is surreal and sometimes I still feel like I've got work in the mornings     Still settling into new routines.  There are things I do each week - hobbies, exercise class, seeing friends etc.  I've decided not to fill every day with doing stuff as sometimes it's just lovely to do nothing    Cash wise I have a modest pension with Royal London which I arranged for a flexi drawdown payment each month and will also receive a council pension in 2 yrs when I'm 60.  My husband who is 8 yrs older is also retired (Sept 21) and he has a couple of modest pensions (one a Teachers Pension) but he receives his state pension this year.  We cover our bills (around £1000 per month) from our pensions and pay for any holidays or household things from savings.  It does help that the mortgage is now paid off and there are two of us with private/public pensions to draw on. 

runningromani

Hi @Dragon_Lily, sounds like it is going well for you, that’s great 🙂 I’m running down the clock, work seem to be extracting their final pound of flesh and am so busy, no chance to wind down a bit and it’s proving very stressful, so any lingering doubts I had about going have been removed. We will make it work and if I have to do the odd bit of temp work so be it, I couldn’t be more miserable (work wise) than I am now. Roll on Easter.

drummersdale

Hi @runningromani I recall you saying last month that you hadn’t had your pension numbers as yet - have you had them yet? I’m just curious if they turned out what you expected them to be - assuming you had a rough idea before you started? I’m always using the partial retirement calculator on the CS pensions website and wonder how accurate it is. Not long for you now - I’m looking at August all being well.