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

DT2001

As suggested see Sea_Shell's squirrelled nuts thread. There are quite a few breakdowns of expenditure on there so you can compare your expectations with others actuals.
Everyone has their own budget as we each have a different ‘take’ on cars, holidays, eating out, groceries etc. I know my total expenditure from the change in bank balances, some areas exactly from bank accounts, but the rest is down to guesstimates as paid in cash so I reckon anyone can get a really good idea from their own records. £25k now with 4 children, in lockdown, and a house that retains little heat is plentiful. I have adjusted our ‘basic’ level of income for retirement accordingly.

AnotherJoe

The last time i worked out my "basic" spending, from memory it was around £15k a year.

So £25k a year would give you £10k a year to spend on 'extras' such as meals out, cinema, travel, friends round, attending weddings* , which doesn't seem too bad.

* remember those days ?

AnotherJoe

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.

'Expensive areas' generally means expensive housing, so as long as you arent paying rent/mortgage, any one area probably isnt much more expensive to live in than another. 

cfw1994

Cus said:

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.

I guess the MSE in me would suggest looking for deals on many of those things....plus being retired *should* mean cherry picking the bargain or last-minute 5* breaks.....£75k pa sounds a super-fluffy+++ luxury amount to ‘manage’ on!!
Avoiding high rate tax ought to be a goal too...so even those targeting high income in retirement ought hopefully be filling up any amounts over around £50k with non-taxed ISAs & suchlike.... 

westv

In answer to the original question, no, £25k isn't unrealistic unless you assume the 6,000 Which users who tool part where telling porkies.

MovingForwards

£25k is more than I earn now and I've never had a new car.

To work out what I need in retirement I deducted all work and mortgage related outgoings and deducted all savings and pension related monies, that provided the figure needed in retirement.
- For two of us, pet and car, one full state pension is more than enough.

Due to knowing that figure, I'm now also planning early retirement. 

My home will have all major works and sympathetic modernising carried out between now and when I retire.

As I'm saving cash, SIPP and into work pension each month there will be more than enough money to cover emergencies and replacements. 

Whichever of us dies first, the other will be financially secure.

AlanP_2

A bit disappointed to see some of the personsal digs on here, we are all different and want to spend different amounts of money in deifferent ways whether retired or working.

I've never been in the camp of "higher rate tax is bad and should be avoided". I would prefer to have a higher income than a lower one and manage the tax minimisation or payment as necessary.

What does "basic" spending cover? 

Our regular bills, groceries, car costs, pets, personal care such as hair & toiletries, medical / dentists etc work out to about £22k a year and I would allocate all those to basic spending.

Entertainment, holidays, hobbies, clothes, sundry household costs (e.g. window cleaner), and any capital costs (house / garden or car) would be in addition so we are targeting ~£50k a year after tax in retirement although it won't be as smooth as that in practice.  

jimi_man

I second the tracking spending on a spreadsheet idea. I did this for last year and I'm doing it now, as we want to stop in two years. We are working on around £1300-1400 a month for two, for all bills including food, (one) car costs and depreciation. I rounded it up £1500 and then doubled it to £3000 as we like travel, so that's our figure. It may well be that we won't spend that. 

DT2001

AlanP_2 said:

A bit disappointed to see some of the personsal digs on here, we are all different and want to spend different amounts of money in deifferent ways whether retired or working.

I've never been in the camp of "higher rate tax is bad and should be avoided". I would prefer to have a higher income than a lower one and manage the tax minimisation or payment as necessary.

What does "basic" spending cover? 

Our regular bills, groceries, car costs, pets, personal care such as hair & toiletries, medical / dentists etc work out to about £22k a year and I would allocate all those to basic spending.

Entertainment, holidays, hobbies, clothes, sundry household costs (e.g. window cleaner), and any capital costs (house / garden or car) would be in addition so we are targeting ~£50k a year after tax in retirement although it won't be as smooth as that in practice.  

Basic I reckon means pretty much what we’ve been spending in lockdown but even then there is wriggle room with Sky package etc. I like the idea of splitting outgoings as if the ‘basic’ is covered by SP/DB then our other pots can be used more flexibly. We are self employed so used to varying income and expenditure which has helped planning for a poor run of returns early in retirement.

DT2001

jimi_man said:

I second the tracking spending on a spreadsheet idea. I did this for last year and I'm doing it now, as we want to stop in two years. We are working on around £1300-1400 a month for two, for all bills including food, (one) car costs and depreciation. I rounded it up £1500 and then doubled it to £3000 as we like travel, so that's our figure. It may well be that we won't spend that. 

I’m glad someone else uses the method I adopted however it sounds as if you could break down your spend more accurately/detailed than me. I reduced by basic figure following lockdown 1 as I was more able to take out work costs but left my ‘allowance’ for travel etc at the original figure. So aiming for £40k which from SPA is easy with 3 DB’s between us giving £12k. Just need to remember during the gap before SP that we’ll not need as bigger a pot so can reduce capital (change from saver to spender....)