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

pensionpawn

MallyGirl said:

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.

We only became wise to this around 10 years ago and have been prioritising my wife's pension ever since. The final booster being dumping all of her salary into her pension during this and her last two two full tax years. This should allow us to draw 2 x £12k5 tax free as a minimum supplemented by two full state pensions in 12 years time. We also installed a large solar array five years ago which effectively eliminates our energy bills for 13 years in addition to generating free fuel 8 months of the year for a future EV. There's more to retirement planning than boosting pension income. Only the first £12k5 of income is tax free, however every penny of cost reduction is tax free!

cfw1994

pensionpawn said:

MallyGirl said:

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.

We only became wise to this around 10 years ago and have been prioritising my wife's pension ever since. The final booster being dumping all of her salary into her pension during this and her last two two full tax years. This should allow us to draw 2 x £12k5 tax free as a minimum supplemented by two full state pensions in 12 years time. We also installed a large solar array five years ago which effectively eliminates our energy bills for 13 years in addition to generating free fuel 8 months of the year for a future EV. There's more to retirement planning than boosting pension income. Only the first £12k5 of income is tax free, however every penny of cost reduction is tax free!

I wish our 4kW solar could give us free energy for all our needs.....sadly our house ran around 20kW each day (pre-EV....read on!), and we live in not-so-reliably-sunny Britain!  

Do you have a large battery too?  One thing I notice, even on a beautiful sunny day, is how we might generate many watts from perhaps 10am-5pm, the TV, lights, cooking all doggedly use power during the hours of darkness.....

That said, we swapped one motor for a Kona EV 20months & 20k miles ago: what a revelation!
Add to that moving to an Octopus GO tariff, where we get 4 hours electricity at 5p/kW - on average, our electric use has now doubled (think 40kW/day) but our electric bill has remained the same: impressive stuff (to me at least!).

Daffodil1234

Thank you to all who have posted here - I'm really pleased I started this thread as I find it so useful to see your replies

pensionpawn

cfw1994 said:

pensionpawn said:

MallyGirl said:

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.

We only became wise to this around 10 years ago and have been prioritising my wife's pension ever since. The final booster being dumping all of her salary into her pension during this and her last two two full tax years. This should allow us to draw 2 x £12k5 tax free as a minimum supplemented by two full state pensions in 12 years time. We also installed a large solar array five years ago which effectively eliminates our energy bills for 13 years in addition to generating free fuel 8 months of the year for a future EV. There's more to retirement planning than boosting pension income. Only the first £12k5 of income is tax free, however every penny of cost reduction is tax free!

I wish our 4kW solar could give us free energy for all our needs.....sadly our house ran around 20kW each day (pre-EV....read on!), and we live in not-so-reliably-sunny Britain!  

Do you have a large battery too?  One thing I notice, even on a beautiful sunny day, is how we might generate many watts from perhaps 10am-5pm, the TV, lights, cooking all doggedly use power during the hours of darkness.....

That said, we swapped one motor for a Kona EV 20months & 20k miles ago: what a revelation!
Add to that moving to an Octopus GO tariff, where we get 4 hours electricity at 5p/kW - on average, our electric use has now doubled (think 40kW/day) but our electric bill has remained the same: impressive stuff (to me at least!).

Our daily average is 22kWhrs, however we also have UFH. I have a 7kW array (6.7Mwhrs last year) split E-W and a solar divert which automatically heats the water via the IH when there is spare generation (March - October). So when the weather is warm the gas is switched off. I don't have a battery as for me they cost more than they save (very frustrating) and to be honest that ship has probably sailed as in the retirement years (~ 30 month away max) our peak electricity demand will move towards lunchtime. I also (even before the pandemic) don't have a huge commute so just swapping my present ICE car for an EV, just to use my own electric, makes no sense at present. However when my current ICE car starts falling apart I'll probably go for a EV that can also double up as a battery for the house. That doesn't make sense (to me) before you retire as the car is at work when the sun is shining and can't soak up your free generation, however when retired it's will be plugged into the home grid, smoothing out the demand from the house, until it needs to take us for a free ride )

Terron

The Which report seems very accurate for me as a single person. I see no reason to doubt it for a couple.

I have never botherd using a spreadsheet for my spending. I would take my total income after deductions, subtracted my extra savings and what was left at the end of the year to give me my yearly spend. Before I lost my job in 2013 that was £18kpa. £19k seems a pretty good figure for now allowing for inflation. It took me a while to build my income back up from the £300pm JSA so I experienced living at various income levels. I could live on £900pm in 2014 without dipping into savings, but had to be frugal. My income then jumped to £1600pm which was comfortable. Due to switching from PAYE to self-assessment I basically payed no tax that year but had to catch up the following one. Note the Which report cover then amount spent so income needs to be higher before tax.

In 2019 I started taking some pensions and could move into Which's luxury band. I started increasing my spend. I went on the most expensive holiday of my life in January 2020. but have been forced to stop spending as much.

Amateurretiree

As a couple our basic spend on utilities, insurances, council tax etc is £650 per month. Basic food is £350 a month. ( we don’t drink much)
So that’s 12 000 a year which is covered by my DB NHS pension.
We do however like to spoil our family, have 1 or 2 long haul holidays a year, and go out for nice meals when able. So that all adds up to about another 15 000, which we draw from DH’s SIPP.
He will get full SP in 3 yrs, my SP is not for another 8 yrs.
If I die DH will get 50% of my DB which will cover bills, obviously if he pops his clogs first I will get the SIPP.
We are lucky in that we can rein spending in if we need to, but I feel for anyone who can’t have a little luxury in their retirement.

tigerspill

I personally pay absolutely no heed to these generalisations. 
What I did *and still do) is track every penny I spend each day in a spreadsheet under various headings - groceries, home, travel, energy, TV, etc, etc.
I did this for several years before I retired.  
Then remove any savings that will happen in retirement and add in others that will increase - e.g. hobbies, travel.
The only way to safely do this is based on YOUR OWN expenditure and circumstances.

 

whatsthenews

Nebulous2 said:

Some odd things in there. Some figures, such as the grocery bill and clothes don’t increase as you move through the bands - where in practice I think they would. People on an essential lifestyle aren’t allowed any alcohol. 

Looking at the video, these people look more like my father’s generation than mine. A reminder perhaps that going part-time now at 58 may still be an exception, rather than common place. 

Some issues with the funding premise, it might be an older video, but the guy who said he could draw 10% of his fund each year would be way off, given the figures I see people talking about here. 

However despite my nit-picking it was reassuring overall. Having just been paid for January, and knowing I only have two months of full-time pay left, I could have an inclination to hit the panic button, but was left feeling it’s all going to be fine. 

when you say "some odd things in here", to what are you referring, because I'd like to look at it!
We would be over the moon with £25k income a year and could live what we would class as a luxury lifestyle as we're surviving on less than half of that ATM. 
£25k per year for a couple might be what Which recommend, but it's simply not possible for many, including some professionals.
In this day and age might also be wise to allow for older kids being at home for longer. 

westv

Which don't "recommend" anything. All they are telling us is what their members told them.

Terron

whatsthenews said:

£25k per year for a couple might be what Which recommend, but it's simply not possible for many, including some professionals.

Perhaps you should read, or at least scan the report before commenting on it.

Which aren't recommending anything. They do an annual survey to find out what people are actually spending. 6,300 retirees this time. The average a couple enjoying a comfortable retirement was spending in 2020 was "£2,110pm or around £25,000 a year". Which also say that £17,200 covers the essentials.

Read more: https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p - Which?