Is £25k (Which) reasonable or unrealistic for a couple?

p00hsticks

Linton said:

Basing your desired requirement expenditure rate on an article in Which is a seriously bad idea.  One persons "comfortable" is someone else's skrimping, or luxury.  Better in my view to track how much you are actually spending now and then plan to keep spending the same amount, possibly minus the things you wont be spending money on in retirement - eg commuting. The article does say "covers the basics" so you do need to leave some for pleasures.

I agree - I put aside one morning a month to go through all our bank accounts, savings etc and make a note (actually an excel spreadsheet) of what's come in and out that month, categorising it into areas like utilities, groceries, travel / car maintenance, clothing, dental/medical, luxuries, entertainment and charity. It means I've got a pretty good understanding of our financial situation and whether we can afford to splash out or need to tighten our belts. 

pensionpawn

How long is a piece of string? Some people may need £50k pa, others £10k! First I would suggest that you do not need anywhere near your final joint take home pay to maintain the status quo. Secondly, as others have said, add up all your bills, subtract what you no longer need to pay out for and wriggle around from that figure for your treats. The third thing to consider is balancing your pots as much as possible as you both still have your personal allowance of £12k5 (which may be where your £25k comes from?) each that your can draw down tax free. That increases to £33k3 if you go down the UFPLS route, which I would have thought is comfortable enough for most retirees to struggle through the year on!

barnstar2077

As others have said, keep track of your regular expenses for a while to see what you need as a minimum and then add on some spending money (assuming you have a nice amount saved for one off big expenses.)

The cost of living in different parts of the UK, combined with peoples interests, will mean the number everyone needs is unique to them.    Someone from up north who spends most of their time bird watching and going for walks in the country is going to have a vastly different budget to someone living in a city in the south of England that will only wear expensive clothes and eats out / goes to the cinema etc every week.

I could live well on £12k a year, but I would imagine that most would consider it very difficult to do.

maisie_cat

Our income is sub £20k and we use savings for capital items. We have no mortgage but we do have an old stone cottage, no central heating etc. Our fixed ish bills are around £500 a month , £220 of which is council tax, and around £1500 of things that we pay less frequently like insurances, TVL and fuel.
The thing that struck me with the which survey were the holiday & leisure expenditure and clothing, none of which we've spent anywhere near. We have spent more on house maintenance though largely because we bought a neglected probate property that had been empty.
Once you add food, and rarely clothing there isn't much else to spend it on. We live in a beautiful area so I personally do not need much to feel content, walking is free mostly, especially with the pubs closed. My husband has hobbies that are  a bit more expensive but allowed for budget wise.
When we first looked at this we used that Which survey, in fact I use the headings in my budget model. After nearly 2 years the overall expenditure isn't too different although COVID has has the effect of less in the pub, more in the supermarket.

green_man

As everyone has said...it depends.  My OH keeps horses which on its own costs around £10k a year. Any expensive hobby can easily push requirements off the scale.

The thing to do is actually monitor what you spend for a few years prior to retirement, don’t try to save particularly but just monitor what your natural expenditure is.  Then from this you can usually remove any long term saving, mortgage (if now paid off) etc etc.  I did this to convince myself that my pot was sufficient for my needs before committing to retirement.    Some costs will reduce in retirement (work travel, work clothes etc) but others will increase, primarily leisure costs.  What can get you is large infrequent purchases, like: Car; house repairs; Wedding etc.    With a bit of thought and analysis you should be able to work out what your bottom line is.

atush

CookieMonster said:

How much will you need per annum to cover basics, including putting into an emergency fund?
Multiply by 1.25 for comfortable. Multiply by 2 for luxurious.
£25K is entirely feasible for a fine lifestyle, unless you've a cocaine habit.

This is insulting rubbish.  Some of us live in expensive areas.

CookieMonster

atush said:

CookieMonster said:

How much will you need per annum to cover basics, including putting into an emergency fund?
Multiply by 1.25 for comfortable. Multiply by 2 for luxurious.
£25K is entirely feasible for a fine lifestyle, unless you've a cocaine habit.

This is insulting rubbish.  Some of us live in expensive areas.

Then move.
Insulting rubbish? I live in the South of England. My basic expenses are £10K per annum, including motorbike insurance.
I will live a life of luxury on £18K p.a.

shinytop

atush said:

CookieMonster said:

How much will you need per annum to cover basics, including putting into an emergency fund?
Multiply by 1.25 for comfortable. Multiply by 2 for luxurious.
£25K is entirely feasible for a fine lifestyle, unless you've a cocaine habit.

This is insulting rubbish.  Some of us live in expensive areas.

I thought everywhere had Lidl and McDonalds.  And Amazon ...

Cus

As many have said, it depends on what you define as a luxury lifestyle.

Living in London, going to the theatre, other entertainment, plus eating at top restaurants, regularly eating out, travelling on many 5 star holidays, gifts, taking out grandchildren, my personal future calc for an ideal retirement is probably north of £75k for a couple after tax in today's money.

Other people may find their version of luxury way cheaper.

enthusiasticsaver

There are so many variables that it is difficult to put a definite number on peoples lifestyles. The best way  to find out how much you need in retirement is to track spending and it will change throughout retirement.  We could live off £25k as a couple in early retirement but our actual income is £10k more. We have enough spare to save to do long haul holidays, several short breaks, run two cars, gift money and have been doing home improvements since retiring.  Most of our discretionary spends go on holidays, days out, hobbies and a country club membership.  If we got rid of those we could live off £12k but we want to be able to do anything we feel like now we have the time.