Retirement - Actual vs Expectation

gorgeousme

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

Linton

gorgeousme said:

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

Yo have not told us how much in pension savings you should have at 60.  Given your stated expenses you wont need anything like "over £500K".   £19.2KX7 years until SP=£134K and then almost all your expenses should be covered by State Pension.

Most people who have given expenditure figures on this forum are saying £30K/year or more expenditure.

Perhaps you should check your maths.

Martico

gorgeousme said:

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

You need to remember that the people on this part of the forum are a small self-selecting proportion of the population who, for the most part, have a strong interest / expertise in maximising pensions. There's no reason to feel inadequate or scared - I read this part of the forum rather than post, as I am quite new to the pension game, having come to it late, so I use it to learn. I'm sure plenty are in a similar position, and you've done well to put your head above the parapet and seek answers to your questions

Pat38493

gorgeousme said:

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

Many of the posters here are relatively affluent and are trying to cover a spend of 30K or sometimes a lot more like 60K or above.

The first step is to understand as accurately as possible how much you think you will need to cover your retirement (including not only your basic essential expenditure, but leisure items, luxuries, and any irregular but significant costs like replacing cars and suchlike).

Also do you still have remaining mortgage or any debts - if so those needs to be taken into account one way or the other?

If indeed your annual expenditure as a couple is £1600pm and that's all, as others have pointed out, by the time you are both receiving state pension, all of your requirements will be met by your state pension.  

Therefore you only really need enough in your pension and savings pots to cover the time between when you retire and when your state pensions are starting.  Based on your figures, £384K is actually way more than enough and you could probably stop working earlier.

There is a thread on the over 50s part of these boards called "How much is enough to live on" which might be worth a read - you can find lots of people living on even a lot less than what you are quoting.

Finally you will also need to consider what will be the situation when one of you passes away before the other, especially if it's much earlier than expected.  That said, the chances of living way beyond 80 years old are quite high these days.

Shimrod

gorgeousme said:

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

Although you see a lot of large numbers on this thread, there are also people who are getting along quite happily on less. It all depends on what sort of lifestyle you want to lead. Read @Sea_Shell thread for some inspiration and comfort! https://forums.moneysavingexpert.com/discussion/6019383/its-time-to-start-digging-up-those-squirrelled-nuts/p1

For your monthly expenditure, make sure you have included an allowance in that for any capital expenses - you may just be taking these out of savings - items such as cars, replacement boilers, house repairs.

Albermarle

gorgeousme said:

Sorry to be unclear. The figures are for my husband and me.  I read other people’s posts on this forum and they often quote figures of over £500k in pensions along with more monies in ISAs, properties and investments so I feel inadequate and scared. I guess I am wondering if I’m chasing after rainbows. I want to learn from others’ experience hence my last paragraph. Retirement should be a happy time, but I’m petrified.

There are also many posters on here who have spent a lifetime building up large pots, which they then find impossible to spend, and will probably end up the richest person in the graveyard.

The key point is do YOU have enough to sustain your planned expenditure? and it seems you do .

Phossy

gorgeousme said:

When I was young, my dream was to retire at 50. Then I became a mum at 32, so I moved the goal post to 55. My child decided to go to university at 18 and I ended up partly funding her for those years and my new goal is to retire at 60.

I have real a lot of posts in this forum and everyone seems to have such high numbers in their pension saving pots whilst mine seems very low despite a frugal life. My actual spend ( household , food, holidays etc) is £1600pm for us as a couple. Assuming we will live to 80, we will need £384k. We will have 2 full state pensions from 67 so is it safe to assume that if our pensions/savings total to say £400k, then we should be able to retire at 60? If we retire at 60, what is the chance that we find it will cost more than expected?

Anyone want to share your Actual life  vs Expectation life with me? Have you been surprised about your spend during retirement? Has that differed much to your expectations?

I can't answer your final question as I haven't retired yet, however, my sense from reading this forum and other sources is that folks spend less than they think they will. Just a theory, but I think folks find pleasure in the simpler things in life rather than the material stuff and/ or they find they don't want to travel as much as they expect.

As for whether you can retire early, if two of you have the full state pension then from age 67 that will be 23K / annum or ~ 1920 / month to live on in todays money (so you are good there).

If you plan to retire at 60 then to cover 7 years to State Pension age you'll need £134,400 in todays money of income after tax (so $134,400 in non-taxable savings or around £160 k if in a personal pension).

otb666

we were made redundant and retired 2 and half years ago at 55.  We have 24k a year to live on and another 3k a year for holidays xmas white goods replacement  and car mot etc.  we have been able to manage but we do make sure we dont overspend.  In 7-9 years we get SP and will have about the same amount.  We found it quite doable once the mortgage had been paid off.

FIREDreamer

Phossy said:

gorgeousme said:

When I was young, my dream was to retire at 50. Then I became a mum at 32, so I moved the goal post to 55. My child decided to go to university at 18 and I ended up partly funding her for those years and my new goal is to retire at 60.

I have real a lot of posts in this forum and everyone seems to have such high numbers in their pension saving pots whilst mine seems very low despite a frugal life. My actual spend ( household , food, holidays etc) is £1600pm for us as a couple. Assuming we will live to 80, we will need £384k. We will have 2 full state pensions from 67 so is it safe to assume that if our pensions/savings total to say £400k, then we should be able to retire at 60? If we retire at 60, what is the chance that we find it will cost more than expected?

Anyone want to share your Actual life  vs Expectation life with me? Have you been surprised about your spend during retirement? Has that differed much to your expectations?

I can't answer your final question as I haven't retired yet, however, my sense from reading this forum and other sources is that folks spend less than they think they will. Just a theory, but I think folks find pleasure in the simpler things in life rather than the material stuff and/ or they find they don't want to travel as much as they expect.

As for whether you can retire early, if two of you have the full state pension then from age 67 that will be 23K / annum or ~ 1920 / month to live on in todays money (so you are good there).

If you plan to retire at 60 then to cover 7 years to State Pension age you'll need £134,400 in todays money of income after tax (so $134,400 in non-taxable savings or around £160 k if in a personal pension).

Can the survivor live on a single state pension after the other one dies? As long as a chunk of the £384k remains, probably yes.

Phossy

FIREDreamer said:

Can the survivor live on a single state pension after the other one dies? As long as a chunk of the £384k remains, probably yes.

I think the the £384k is an assumption / red herring; it  was perceived as a need for 20 years worth of $1600 / month. I don't believe that is an existing savings pot.