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

Croeso69

AlanP_2 said:

robatwork said:

£25000 is plenty for the basics of life - food, taxes, utilities if you aren't above the standard deviation of housing ie. average or just above or below. Everything else depends on your hobbies - if you go to the theatre weekly (not that you can at the moment), keep tigers and enjoy the finest truffles every Wednesday, buy a new Jag every 2 years, then it won't be enough.

If your lifestyle is more ascetic then it's a decent amount. 

Would tigers and jaguars get on together do you know 

Remember the Esso advert: "Put a tiger in your tank". Even a jaguar

Kynthia

It's interesting to think about this. As someone with young children I'm a long way off retirement as I can't imagine helping to fund my children at university on pension income.

I honestly have no idea what my number would be as my current spending lifestyle feels very different to what it would be in retirement. I've never thought to calculate what our annual take-home income is after tax, NI, childcare vouchers and pension contributions to see what we are currently living on as we tend to just be aware of our gross salaries. Then I would need to eliminate what we put into savings, our mortgage, commuting expenses, childcare costs, childrens activities/clubs, all their clothes, etc. It would be interesting to do some of it though to get an idea and check whether our pension planning is on track. That's quite a lot of deductions from our gross salaries which makes me think our required net income will be lower than I had thought.

bluenose1

Kynthia said:

It's interesting to think about this. As someone with young children I'm a long way off retirement as I can't imagine helping to fund my children at university on pension income.

I honestly have no idea what my number would be as my current spending lifestyle feels very different to what it would be in retirement. I've never thought to calculate what our annual take-home income is after tax, NI, childcare vouchers and pension contributions to see what we are currently living on as we tend to just be aware of our gross salaries. Then I would need to eliminate what we put into savings, our mortgage, commuting expenses, childcare costs, childrens activities/clubs, all their clothes, etc. It would be interesting to do some of it though to get an idea and check whether our pension planning is on track. That's quite a lot of deductions from our gross salaries which makes me think our required net income will be lower than I had thought.

It's a really good exercise to do. especially when you factor in that in retirement you wont be paying  for NI, Pension deductions and hopefully not Childcare vouchers!!! . The figure you require  for retirement may be less than you think. My husbands gross pension  when he retired was half of his gross salary, however this worked out at  about 75% of his previous net income when we factored everything in. 

MallyGirl

I have quite a simple list, as mentioned above. It also has child related spending at the bottom of the list with a running total down the side so I can see where I will be without the child costs. At the moment I top up her uni maintenance loan, cover her car expenses, pay for insurance for her stuff. I won't be doing any of those when she graduates which is the year after our current planned early retirement date. When she was younger I paid school fees at some points, stagecoach, sports, lots of music costs, a clothes allowance in later years, pocket money, etc. It was all on the list to form a rough budget.
If you don't have those basic figures how would you know if you were overspending, or had enough spare to increase pension contributions?

drummersdale

bluenose1 said:
It's a really good exercise to do. especially when you factor in that in retirement you wont be paying  for NI, Pension deductions and hopefully not Childcare vouchers!!! . The figure you require  for retirement may be less than you think. My husbands gross pension  when he retired was half of his gross salary, however this worked out at  about 75% of his previous net income when we factored everything in. 

That's what I'm banking on too - I'm looking to go part time if possible from April 22 by which time I should have accrued 40 years of Classic CS DB pension so my pension should be half of salary but it's surprising how much NI you pay so am working on the basis that I will pay less via PT salary and none on my pension - which coupled with savings from not travelling as much, etc will mean the difference may not be as great as it seems as if I were working the full 5 days. 

Kynthia

bluenose1 said:

Kynthia said:

It's interesting to think about this. As someone with young children I'm a long way off retirement as I can't imagine helping to fund my children at university on pension income.

I honestly have no idea what my number would be as my current spending lifestyle feels very different to what it would be in retirement. I've never thought to calculate what our annual take-home income is after tax, NI, childcare vouchers and pension contributions to see what we are currently living on as we tend to just be aware of our gross salaries. Then I would need to eliminate what we put into savings, our mortgage, commuting expenses, childcare costs, childrens activities/clubs, all their clothes, etc. It would be interesting to do some of it though to get an idea and check whether our pension planning is on track. That's quite a lot of deductions from our gross salaries which makes me think our required net income will be lower than I had thought.

It's a really good exercise to do. especially when you factor in that in retirement you wont be paying  for NI, Pension deductions and hopefully not Childcare vouchers!!! . The figure you require  for retirement may be less than you think. My husbands gross pension  when he retired was half of his gross salary, however this worked out at  about 75% of his previous net income when we factored everything in. 

We are in our early/mid-40s and thankfully have DB pensions. Mine is roughly £15k a year so far and my husband's is about £9k. Those combined with our state pensions seem like they'll more than cover our basics. The issue is covering the years before state pension kicks in, which is hard as they're the years we probably want to spend the most and most of the DB pensions don't start until SPA either.

Also it may seem pessimistic but i need to ensure we are both okay should one of us pass away early, or in case we should split up between now and retirement as I'd hate to get complacent and be left without the time deal with any shortfalls. 

AlanP_2

Kynthia said:

bluenose1 said:

Kynthia said:

It's interesting to think about this. As someone with young children I'm a long way off retirement as I can't imagine helping to fund my children at university on pension income.

I honestly have no idea what my number would be as my current spending lifestyle feels very different to what it would be in retirement. I've never thought to calculate what our annual take-home income is after tax, NI, childcare vouchers and pension contributions to see what we are currently living on as we tend to just be aware of our gross salaries. Then I would need to eliminate what we put into savings, our mortgage, commuting expenses, childcare costs, childrens activities/clubs, all their clothes, etc. It would be interesting to do some of it though to get an idea and check whether our pension planning is on track. That's quite a lot of deductions from our gross salaries which makes me think our required net income will be lower than I had thought.

It's a really good exercise to do. especially when you factor in that in retirement you wont be paying  for NI, Pension deductions and hopefully not Childcare vouchers!!! . The figure you require  for retirement may be less than you think. My husbands gross pension  when he retired was half of his gross salary, however this worked out at  about 75% of his previous net income when we factored everything in. 

We are in our early/mid-40s and thankfully have DB pensions. Mine is roughly £15k a year so far and my husband's is about £9k. Those combined with our state pensions seem like they'll more than cover our basics. The issue is covering the years before state pension kicks in, which is hard as they're the years we probably want to spend the most and most of the DB pensions don't start until SPA either.

Also it may seem pessimistic but i need to ensure we are both okay should one of us pass away early, or in case we should split up between now and retirement as I'd hate to get complacent and be left without the time deal with any shortfalls. 

Time to open up the laptop and get Excel going by the sounds of it.

I track our income and expenditure and have done for years so we had a prety good understanding of what our costs were with and without the 3 kids at home. Now that retirement is visible on the horizon (6 - 24 months) we can be confident that our income (mainly DB like yours) will be enough to cover our outgoings with top ups from SIPPs and ISAs pre State Pension and for larger capital costs and more expensive holidays etc.

Working out what categories you want to track and settiong it up takes a bit of time and will evolve as you start thinking about the "what if" aspects and "when" but it isn't too onereous as most expenditure is via DD or on cards so recorded anyway.

Don't ignore the "how much do we need / want" aspect as well. Two week family camping trips to France for 5 are a lot cheaper than long-haul 3/4 week trips for 2 so you can't just roll current "holiday" costs forward in that scenario.

MallyGirl

That is not pessimistic - it is sensible and we often see people on here who didn't think this through. Often the wife has a much lower pension built up because there was less tax/NI to be saved on the way in, and also from non working years due to caring for children, but that means there is no way to use her £12,500 0% tax band on the way out. The whole picture needs looking at, and from both sides.

atush

shinytop said:

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 ...

No aldi, no lidl, some amazon.

Annemos

The disconcerting thing about the past income forecasts I did:  I also used to add on amounts for interest income received on bank accounts. Dizzy heights of 5 per cent. 

Then I just got to a point where I thought.....well, I may as well just put them all to zero interest income! (After the financial crash.)

With people pondering negative interest rates these days....I hope we don't end up with "haircuts" on our bank accounts at some stage!