This has been such a thought-provoking thread, as others have said. Thanks for starting it.
Unfortunately none of us can know where we are going, or even how we are likely to get there, so we can only use our individual experience of the past to try to predict our futures. In the words of the French philosopher Paul Valery, "The problem with the future is that it is not what it used to be". (Although he probably actually said it in french!)
Therefore, working out what you might be able to live on in years to come is rather a cumbersome method to arrive at the NUMBER. There are far too many variables involved.
On the other hand, as we all know what we are able to live on at our current standard of living (because we are all doing it), it is simple enough to multiply this by 12 which provides (an approximation of) your NUMBER i.e if you are currently living on £30k p.a. your NUMBER (to keep you at your present standard of living) will be in the region of £360k. Obviously there is no precision in this and everyone will have different needs, wants, ambitions etc., but it provides a working model for fine tuning I think.
Others might disagree with the multiplier... or with my concept. In fact, they probably will.
Top quote. I agree entirely with the concept about the future; things change constantly.
Your multiplier is a bit rough and ready (a bit like mine!), but the important thing is that you have something to aim for, and that's half the battle.:T
This has been such a thought-provoking thread, as others have said. Thanks for starting it.
On the other hand, as we all know what we are able to live on at our current standard of living (because we are all doing it), it is simple enough to multiply this by 12 which provides (an approximation of) your NUMBER i.e if you are currently living on £30k p.a. your NUMBER (to keep you at your present standard of living) will be in the region of £360k. Obviously there is no precision in this and everyone will have different needs, wants, ambitions etc., but it provides a working model for fine tuning I think.
...and THANKS for your feedback!
Is your estimation method saying that if my NUMBER is £30k, I should have £360k
in pension/savings to fund it in future? (at age 65?)
There is no right or wrong method, its good to hear others ideas
...but I am not sure I understand your method...
THE NUMBERis how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)
for absolute essentials for living ie energy, small car, insurances etc no mortgage then 12k is just about ok but it gives basic living and a cheap uk coach tour for a holiday
For our present, retired lifestyle ie comfortable with a couple of holidays and waitrose food then 24K works well
More pension expected next year so the number will rise to 50k, followed by another addition of 7K a couple of years ahead
much more than enough so good holidays ahead and no scrimping at all for the rest of our lives. Having said that, tax will reduce that somewhat. It was all about saving and investing for retirement. Not at all bad considering we came from the poorest area in a big town. Made possible by hard work and frugality, like home baking and camping holidays of course but definitely worth it
Made possible by hard work and frugality, like home baking and camping holidays of course but definitely worth it
Really surprised to see you shop in Waitrose after being frugal for so long? Don't think I could ever be rich enough to do all my shopping in there or M&S. I go to Waitrose as a treat sometimes to use their salad bar, colleague comes with me & fills her basket every time, much to my horror . Still, my mortgages should be paid off in 7 years, she is on IO with no savings scheme to pay off capital....
Well done on what you've achieved. It would be interesting to know people's backgrounds & how you're faring compared to your parents. I have a better job than my father did but because he was in a very generous works pension he had a fairly comfortable retirement. Whereas I had a lot of time off when I had children so I have a lot of catching up to do :rolleyes:
A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
Mortgage Balance = £0
"Do what others won't early in life so you can do what others can't later in life"
Really surprised to see you shop in Waitrose after being frugal for so long? Don't think I could ever be rich enough to do all my shopping in there or M&S. I go to Waitrose as a treat sometimes to use their salad bar, colleague comes with me & fills her basket every time, much to my horror . Still, my mortgages should be paid off in 7 years, she is on IO with no savings scheme to pay off capital....
Well done on what you've achieved. It would be interesting to know people's backgrounds & how you're faring compared to your parents. I have a better job than my father did but because he was in a very generous works pension he had a fairly comfortable retirement. Whereas I had a lot of time off when I had children so I have a lot of catching up to do :rolleyes:
I never shopped at waitrose until this year. Background, very poor ie money not love or aspirations. 7 children, me oldest. 11 plus all of us. Parents did without and we all went to uni or college. Beautifully cared for children, clever parents who didn`t have any chances. We have all done well but only because our parents gave us the springboard
Being frugal in my immediate family wasn`t about doing without, on the contrary. We ate all hm and had hm clothes, chickens, home grown veg. Two foreign camping hols in 30 years and lots of camping in the uk. Our children are doing even better than us as the aspirations went down the family. The best thing is that we are all very happy as we appreciate all we have earned. No civil service pensions by the way just sheer savings and the hard route but with an eye to `getting old`
What a great tale IMMOL! Your parents sound very special & you've obviously passed that on to your offspring. Enjoy Waitrose (especially their Organic red wine )
I agree with you that being frugal doesn't mean going without, it's all about getting more for less. So, I will happily fly Ryanair & Sleazyjet & book a small car to give me more hols for my money, whereas friends 'wouldn't lower themselves' (their words!) and have less hols as a result (or the same, but bung them on the credit card :eek:).
A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
Mortgage Balance = £0
"Do what others won't early in life so you can do what others can't later in life"
What a great tale IMMOL! Your parents sound very special & you've obviously passed that on to your offspring. Enjoy Waitrose (especially their Organic red wine )
I agree with you that being frugal doesn't mean going without, it's all about getting more for less. So, I will happily fly Ryanair & Sleazyjet & book a small car to give me more hols for my money, whereas friends 'wouldn't lower themselves' (their words!) and have less hols as a result (or the same, but bung them on the credit card :eek:).
Yes...a great achievement...and not just financially...well Done!
Knowing (estimating) one's NUMBER....or range of NUMBER's (Basic...comfortable....Luxury) allows us to know
what we can realistically expect in retirement (or semi retirement).
Personally I prefer to aim lower for expectations, but then work hard to do better and reap the rewards.
More difficult if you do not calculate your NUMBER in the first place!
THE NUMBERis how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)
Is your estimation method saying that if my NUMBER is £30k, I should have £360k
in pension/savings to fund it in future? (at age 65?)
There is no right or wrong method, its good to hear others ideas
...but I am not sure I understand your method...
Yes, that is exactly what I mean. Working it out this way makes irrelevant how much you think you are going to need in retirement because we are all at different stages of our working lives and we cannot begin to guess at the effect of inflation. So, if you know that you can live on your current earnings, then having a pot equivalent to 12 times (or thereabouts) will generate a similar income in perpetuity. Don't forget that the effect of inflation will be counteracted by the growth of the investment products in your fund. And also, don't forget that your needs in retirement will diminish in time - the mortgage, the free loading kids, the temptation to upgrade technology, fashion, long haul holidays; all these disappear. Finally, assuming that the State Retirement Pension is still in existence, it is worth remembering that this is equivalent to having a personal fund well in excess of £100k. So really your £360k fund (to keep you afloat at £30k) need only be, in reality, £260k or less.
Whether the state pension can survive is of course another question. I can see successive governments of whatever colour making the SRP means tested, and even robbing the personal funds we are trying to build up for our own provision. Don't think it can't happen because it has.
But what is so important about this thread is that it brings into stark reality the sheer amount of money we will need to maintain any semblance of a similar standard of living in retirement to that which we enjoy during our working lives. And the only opportunity we have to improve this is while we are working. In spite of the faint hope of a premium bond win, or discovering a long lost cousin in Australia who owns a gold mine but has no other relatives! So thank you again for starting it.
"It is better to light a single candle than to curse the darkness"
So, if you know that you can live on your current earnings, then having a pot equivalent to 12 times (or thereabouts) will generate a similar income in perpetuity.
I would feel vunerable with only £360k to fund £30k income.
If you start with £360k, add 4% growth pa, but deduct £30k pa (not increasing).... the money runs out at age 80.
I know we will probably not make 80, but this raises another aspect of the NUMBER: How much safety buffer should we build in for care costs in later life?
The way the government is going, stripping out our pensions value and means testing everything... I do start to wonder if we should PLAN to run out at age 80....then go and BEG for our daily bread...or go to the clinic in Switzerland!:cool:
THE NUMBERis how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is £26k pa)
...
If more folks maintained a "Lifetime spreadsheet", they could see how their spending / saving / pensions were progressing and test this against their "NUMBER" to see if they were on target....
Forgive the newbie question, and the belated reference to a long-forgotten post (it was #19), but what is this "lifetime spreadsheet" of which you speak? Is it something you worked out for yourself, or is there a template somewhere that I could crib?
Replies
Your multiplier is a bit rough and ready (a bit like mine!), but the important thing is that you have something to aim for, and that's half the battle.:T
...and THANKS for your feedback!
Is your estimation method saying that if my NUMBER is £30k, I should have £360k
in pension/savings to fund it in future? (at age 65?)
There is no right or wrong method, its good to hear others ideas
...but I am not sure I understand your method...
For our present, retired lifestyle ie comfortable with a couple of holidays and waitrose food then 24K works well
More pension expected next year so the number will rise to 50k, followed by another addition of 7K a couple of years ahead
much more than enough so good holidays ahead and no scrimping at all for the rest of our lives. Having said that, tax will reduce that somewhat. It was all about saving and investing for retirement. Not at all bad considering we came from the poorest area in a big town. Made possible by hard work and frugality, like home baking and camping holidays of course but definitely worth it
Really surprised to see you shop in Waitrose after being frugal for so long? Don't think I could ever be rich enough to do all my shopping in there or M&S. I go to Waitrose as a treat sometimes to use their salad bar, colleague comes with me & fills her basket every time, much to my horror
Well done on what you've achieved. It would be interesting to know people's backgrounds & how you're faring compared to your parents. I have a better job than my father did but because he was in a very generous works pension he had a fairly comfortable retirement. Whereas I had a lot of time off when I had children so I have a lot of catching up to do :rolleyes:
I never shopped at waitrose until this year. Background, very poor ie money not love or aspirations. 7 children, me oldest. 11 plus all of us. Parents did without and we all went to uni or college. Beautifully cared for children, clever parents who didn`t have any chances. We have all done well but only because our parents gave us the springboard
Being frugal in my immediate family wasn`t about doing without, on the contrary. We ate all hm and had hm clothes, chickens, home grown veg. Two foreign camping hols in 30 years and lots of camping in the uk. Our children are doing even better than us as the aspirations went down the family. The best thing is that we are all very happy as we appreciate all we have earned. No civil service pensions by the way just sheer savings and the hard route but with an eye to `getting old`
I agree with you that being frugal doesn't mean going without, it's all about getting more for less. So, I will happily fly Ryanair & Sleazyjet & book a small car to give me more hols for my money, whereas friends 'wouldn't lower themselves' (their words!) and have less hols as a result (or the same, but bung them on the credit card :eek:).
Yes...a great achievement...and not just financially...well Done!
Knowing (estimating) one's NUMBER....or range of NUMBER's (Basic...comfortable....Luxury) allows us to know
what we can realistically expect in retirement (or semi retirement).
Personally I prefer to aim lower for expectations, but then work hard to do better and reap the rewards.
More difficult if you do not calculate your NUMBER in the first place!
Whether the state pension can survive is of course another question. I can see successive governments of whatever colour making the SRP means tested, and even robbing the personal funds we are trying to build up for our own provision. Don't think it can't happen because it has.
But what is so important about this thread is that it brings into stark reality the sheer amount of money we will need to maintain any semblance of a similar standard of living in retirement to that which we enjoy during our working lives. And the only opportunity we have to improve this is while we are working. In spite of the faint hope of a premium bond win, or discovering a long lost cousin in Australia who owns a gold mine but has no other relatives! So thank you again for starting it.
I would feel vunerable with only £360k to fund £30k income.
If you start with £360k, add 4% growth pa, but deduct £30k pa (not increasing).... the money runs out at age 80.
I know we will probably not make 80, but this raises another aspect of the NUMBER: How much safety buffer should we build in for care costs in later life?
The way the government is going, stripping out our pensions value and means testing everything... I do start to wonder if we should PLAN to run out at age 80....then go and BEG for our daily bread...or go to the clinic in Switzerland!:cool:
Forgive the newbie question, and the belated reference to a long-forgotten post (it was #19), but what is this "lifetime spreadsheet" of which you speak? Is it something you worked out for yourself, or is there a template somewhere that I could crib?