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Retirement - Actual vs Expectation

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  • Pat38493
    Pat38493 Posts: 3,332 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Phossy 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. 
    OK - so if you reverse engineer the situation - if you wanted to cover £1600 per month for 7 years (assuming both their SP kicks in at same time which might be wrong of course), how much would they actually need?

    Very roughly, £140K? (this is just a back of a napkin thing assuming that investment returns matches inflation).
  • CrickJon
    CrickJon Posts: 81 Forumite
    Second Anniversary 10 Posts Name Dropper
    edited 15 May 2024 at 9:06PM
    Pat38493 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.
    Where is the over 50s board? I can't find it anywhere.

    Edit: I've found it! In the Money Saving one!
  • MallyGirl
    MallyGirl Posts: 7,201 Senior Ambassador
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    CrickJon said:
    Pat38493 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.
    Where is the over 50s board? I can't find it anywhere.
    https://forums.moneysavingexpert.com/categories/over-50s-money-saving?utm_source=community-search&utm_medium=organic-search&utm_term=over+50s

    I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
    & Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
    All views are my own and not the official line of MoneySavingExpert.
  • Linton
    Linton Posts: 18,154 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    edited 16 May 2024 at 9:58AM
    Hello all, thank you everyone for responses. My actual monthly expenditure is £1250 and I put aside another £350 a month for non regular things eg repairs, clothes etc.  Your kind words have really help and  comforted me a lot, I was starting to panic. I am happier to carry on putting in as much money away as possible until we reach 60 and that should take us to the £400k mark.
    £400K sensibly invested by my rough calculations should support total annual expenditure of over £25K/year provided the pension pot is equally divided between you.  With a £400K pot, and perhaps little experience of investing, it may well be worth your while paying for professional advice some time before retirement.
  • Albermarle
    Albermarle Posts: 27,864 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    zagfles said:
    Hello all, thank you everyone for responses. My actual monthly expenditure is £1250 and I put aside another £350 a month for non regular things eg repairs, clothes etc.  Your kind words have really help and  comforted me a lot, I was starting to panic. I am happier to carry on putting in as much money away as possible until we reach 60 and that should take us to the £400k mark.
    You'll be fine - as above read Sea Shell's diary - she and OH retired young with a very similar spend. Don't think you need the sort of amounts other people claim to need, you know what you spend now. Some people are incapable of budgeting or finding value, or have expensive hobbies. I know a couple who earn probably around £120k between them and spend the lot, and think they need to! But they go out for meals spending £100+ for 2 without a thought, just for a meal out, whereas we'd go to the local curry house and spend £30 and probably have a better meal! 

    The ability to live a happy contented life on a low'ish income is a gift, the ability to find value, the disinterest in overpriced tat or status symbols, not believing myths like "you get what you pay for", not always assuming a correlation between price and quality. That's probably worth a half million pension pot  :)
    Thank you for your kind words.

    in a world filled with sarcastic keyboard warriors, it is really refreshing to experience such helpfulness and kindness in these forums. Thank you to you all, you have all helped me.
    in a world filled with sarcastic keyboard warriors, it is really refreshing to experience such helpfulness and kindness in these forums.

    If you read them for long enough, then you will find the odd stroppy type  :)
  • Qyburn
    Qyburn Posts: 3,605 Forumite
    Fifth Anniversary 1,000 Posts Name Dropper
    Hello all, thank you everyone for responses. My actual monthly expenditure is £1250 and I put aside another £350 a month for non regular things eg repairs, clothes etc.  Your kind words have really help and  comforted me a lot, I was starting to panic. I am happier to carry on putting in as much money away as possible until we reach 60 and that should take us to the £400k mark.
    You sound well set up, having a good grasp of how much you'll need. I do something similar, a monthly standing order goes into a budget account to cover irregular expenditure like in our case heating oil.

    We're nearly 18 months into retirement and our actual spending is coming out somewhere a bit higher than I hoped, but comfortably below what I had planned for. Some of that might be inflation between the time we were finalising our plans and actual retirement.
  • m_c_s
    m_c_s Posts: 330 Forumite
    Part of the Furniture 100 Posts Name Dropper
    Hello all, thank you everyone for responses. My actual monthly expenditure is £1250 and I put aside another £350 a month for non regular things eg repairs, clothes etc.  Your kind words have really help and  comforted me a lot, I was starting to panic. I am happier to carry on putting in as much money away as possible until we reach 60 and that should take us to the £400k mark.
    You are doing fine in achieving your goal to retire at 60 and quite possibly earlier if you are going to receive 2 full SPs at 67. One thing that you can do is to minimise or eliminate your combined income tax in retirement (especially when SP kicks in) by having broadly equal pension pots. So if one of you has no or a much smaller pot it maybe worth focussing on topping that one up first. This will allow you to maximise any potential withdrawal at 60 or earlier without paying any tax if your combined monthly needs are modest and then when SP kicks you will pay the least amount of income tax by sharing the burden equally.
    Good luck and well done for saving nearly 400k - it is way above average in the UK.
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