Inspired by the thread with the chap talking about mortgage overpayments v investing, im interested in what others think they need for retirement.
Personally im sick to death of work & bored senseless. I own my own home, not married, no children or dependencies, early 50's. I have about 400k in savings, pensions & investments.
Lately ive been trying to decide if this is enough to jack it all in? Although 1/2 of me thinks whilst its possible to earn good money then I should continue to do so, but at what point do you decide enough is enough.
I appreciate there will be those who have considerably more & those who have considerably less.
And before anyone asks, I don't like to talk about my charity work.
How much is your home worth, and is it the one you would retire to/die in?
If not, how much extra/less would that differential provide?
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once 😎 Work less, play more.
The first rule of Charity work is no one talks about Charity work
or something
Your pot would be big enough for me to give up work. Unless you absolutely love your job. Time is the one thing you can't buy.
Edit myself actually. I'd give up work once current situation changes.
What's the split between pensions vs. everything else?
Why on earth would you stay at work when you have no dependents? You’ve only got 20 years of active life left if you’re lucky. Make the most of it.
Its an interesting question. I often ponder it when watching Grand Designs. It seems a lot of them have the choice to live in an ordinary house and never have to work again or spend stupid amounts of money on taps and windows and have another 10 years of working all hours.
My very rough figures. £1 million - High life doing lots of nice things, £500k - pretty decent life if the mortgage is paid off, £250k - comfortable if the mortgage is paid off and you aren't extravagant. A lot depends on how long you live and whether you can get a return on the money.
£400k is a good wedge, why not go part time or do something you enjoy for a living but less money? the problem with retiring is - you'll need to do something with all that free time - or if you've got a good plan for retirement and the numbers stack up then what are you waiting for? I know of a few people who worked hard all their lives, built a up a nice pension and a list of what they wanted to do when they retire, to keel over at 65 and become the richest corpse in the cemetery.
thegeneralist - I may sell & buy a similar value property in another part of the country. I would then anticipate staying there.
kayla1 - indeed. i wouldnt be buying a new bike every year but have lived quite comfortably over the past year on around 6k. This would be a bit more if times were more normal though, holidays etc.
Aidy - 300k pension, 75k s&s isa, the rest cash.
nickjb - yes I would like a bigger house with wonderful views but this would mean about 100k & therefore about 5 more years of work. I can live without a bigger house. Your figures, are they for retiring in your 50's?
There will able so a reasonable inheritance at some point, although of course that isnt guaranteed due to various factors, so I haven't included that.
Jesus I’d not spend more than a few seconds considering it if I was in your position let alone ask others, I’d be retired. I’m looking at going in 7 years time with probably still 3 dependants, a pension but nothing like in savings.
If money gets tight you could always do seasonal work on zero hour contracts or bank so you please yourself when you work.
Don't forget that if all the basics are covered, then a couple of part time shifts in the local Co Op or whatever can make a big difference to spare income and gives a bit of structure.
Or go part time at your current job. I went down to 4 days many years ago; 3 day weekends are great. I'll look at going down to 2 or 3 days soonish I think rather than stopping completely.
Ultimately only you know how frugal you can be - 40 years of retirement with no nice holidays or new bikes is a long time. Work less, play more is a great mantra, but play usually costs money.
Have a look on the which pension drawdown calculator.
Ive just plugged in your figures and sensible investment would support an income of @£22k per year. If you took a 25% tax free lump sum that would drop to £17k.
£400K !!?? Have you just posted this to show off?
As above more than enough to stop working right now and enjoy it.
Yes, I am envious, mid 50's and desperately chasing a 300k pension pot to retire when 60.
I'm 42 and do IT contract work. I have pretty good savings, although not 400k. I also have a house with another 450k on the mortgage (haha don't ask).
I have no kids or dependents.
I've just had 11 months out of work. I spent 2 months in Vietnam and 6 months in Poland.
I rent my place on Open Rent (covered all bills).
I'm now back in work, probably for 6 months or a year. I certainly don't feel tied down, I'm quite enyoing working at the moment.
Do what you want to do, take some risks. (I think it's more a mind-set, I see so many people making execuses and not living their lives).
Sit down and write a couple of plans.
First one, what do you want to do with your retirement and all that time you'll have on your hands. I was furloughed for 10 weeks over summer and realised that the days can take some filling when work suddenly stops and you need to be mindful of the finances.
Second plan depends on the first. If you decide that actually you are not quite ready to throw in the career just yet then make a plan on how long you need and what your goals are. Is reducing the hours an option, say drop to 4 days a week. I know a few people who are doing this and the only cautionary note would be make sure that you are not doing 5 days in 4!
Do remember that 22k a year now is not the same as 22k a year in 10 years time, or 20 years time...
And any pension income will be taxable.
And you'll probably be spending more money than you are now when retired as you'll have much more free time on your hands.
Your figures, are they for retiring in your 50’s?
Yes, retiring in your 50s. I think you'd still need to manage the money, either with stocks and shares or maybe property, it wouldn't be enough just to draw down, I think. I might be way off but if I had 400k and no mortgage then I'd seriously consider retiring (maybe with a little, interesting part time work to top up and keep active)
kayla1 – indeed. i wouldnt be buying a new bike every year but have lived quite comfortably over the past year on around 6k. This would be a bit more if times were more normal though, holidays etc.
Yes, I hear that the past year or so has prevented people spending money on stuff they'd normally not think twice about! If it was me (well, us actually, me and my OH that is) we'd be off like a shot. The pair of us could live very comfortably indeed thank you very much on 15k per year between us. I love my job/business but I wouldn't do it if I didn't have to ✌
When I started work about 15 years ago I worked out that I would need/ want roughly £3m to stop working:
~£1m house
~£1m private education for kids/ general cost of kids
~£1m invested at ~4% to live off (ie £40k/year)
Given that I still don't have kids (or any sign of kids in the near future), and I'm not sure that 4% is achievable at the level of risk I would be willing to take, I'm not sure these figures still stack up...
EDIT: When I say stop working I mean no longer requiring an income, giving me the freedom to invest my time and energy in something completely altruistic/ philanthropic.
The real question for the OP is how expensive is the lifestyle that you want? And what you want to do with your time/ how you plan to fill each day? Having no mortgage is a massive help.
dantsw13 - thats a really good link thank you.
Various others - yes seasonal zerohour type work for 1 or 2 days a week are certainly an option I have been considering, although being quite lazy I wouldnt want to do anything too strenuous!
Coyote - dropping to 2 or 3 days a week would be great but not an option unfortunately.
£400k is a good wedge, why not go part time or do something you enjoy for a living but less money? the problem with retiring is – you’ll need to do something with all that free time
This^^
You also need to consider that you may not need it for 40 years as very likely you won't be alive at 90 and even if you are still alive you may have developed dementia at say 75 and any money you had left will go to your care costs until it runs out.
Out of curiosity, what do you do with your lump sum in order to draw down income/interest in the most efficient way?
...why not go part time or do something you enjoy for a living but less money? the problem with retiring is – you’ll need to do something with all that free time
This +1
We are mid-way through this, I’m 56 and took redundancy in 2018. Speaking to a financial advisor and the best piece of advise was to buy the cheapest house you need to release capital. We sold a 4 bedroom house in Hampshire and having a 2 bed house built on the Isle of Mull - it’s configured to allow living on the ground floor if needed. We have a micro business and I’ll do some part-time work and won’t need to touch my pensions until retirement dates. I can’t even imagine going back to the world of work - we’re putting our welfare and health first - staying active and getting out everyday. The only sacrifice will be foreign holidays and trips - but in a post-COVID world, will that even be possible?
kerley - yes of course this could happen & that's the reason I haven't included the inheritance coming my way from my father, as this could all be used for his care.
I had anticipated on living till 80 but of course this isnt something you can plan!
dovebiker - this sounds wonderful
Aidy – 300k pension, 75k s&s isa, the rest cash.
Assuming that ~100k is enough to tide you over until you can access your pension, I'd jump at it, personally.
Source a job that is part time but nets you around £200 a week.
No tax, minimal ni payments.
3 days working, and not spending
4 days playing and spending
If you can survive, ha ha on your part time income then you will keep ypur pension and investment secure
You need to look at the tax implications once you crystalise and start draw down, lump sum payments
Holidays chew through savings, but if your semi retired it will feel like a holiday most weeks anyway
Plus factor in state pension at say 68
Plus will spend less as you age as sports become less possible
Plus you will be able to downsize and relocate to release a bundle of equity if you need to.
All depends what you want from life and retirement,
Just getting part time/seasonal/zero hours work is not so easy at present and will no doubt get even more difficult over the next few years what with pandemic and Brexit downturns to come. Hundreds of applicants for driving and supermarket jobs.
It's all relative and changes for everyone.
I know a few at work who are looking to transfer 1.8 million into SIPPs and are still worried it might not be enough.
Obviously that is utter greed and stupidity but it highlights how it is a personal decision on what is enough.
Speak to people who have retired and one thing shines through, they all say you need far less money that you imagine.
I longed for £300k so I could stop working for 10 yrs then worry about the rest later lol.
It's all changed now but I will be going at 55 as soon as I can access my SIPP.
I won't work a day longer than I have to.
and I’m not sure that 4% is achievable at the level of risk I would be willing to take,
It is. Although I wouldn't get carried away with this years results as they are a bit crazy.
My SIPP is up over 10% since last year and is invested in a relatively low risk fund mix.
What Aidy said
I think your biggest stumbling block will be when you can access your pension fund.
I retired in September 2019 @ 55. Pension pot was £397k, no mortgage, or other debts
Moved my DB company pension to Royal London, took £60k lump sum (if you ignore the withdrawals and IFA fees, the pot is around £15k more than original value).
Company pension was only going to give me £1k/month, RL gets me £1400. Which I'll reduce when the state pension kicks in
singletrackmind - yes that would work for sure. The internal battle being do I stay with my current role earning whats pretty decent money for what is to be honest very little work for as long as possible or until the inevitable redundancy that the company I work for seems to be permanently going through.
And yes I doubt, although I may be wrong, that I will still be going to morzine & whistler when Im in my 60's.
And before anyone asks, I don’t like to talk about my charity work.
For the last time Dougal, that money was just resting in my account!
Do a bit of googling around FIRE (Financial Independence, Retire Early) movement, plenty of good (and bad), advice.
I find it quite amusing that the FIRE podcasters etc all seem to be people who haven't managed it yet want you to pay them to advise you how to achieve it!
but have lived quite comfortably over the past year on around 6k
C'mon people. I call End of Thread. This is a non conversation.
JFDI
Assuming a return of 1.5% , you'd never, I repeat NEVER use that money up. Add into the equation your house, the fact that you should aim to use the money up, and the possible inheritance..... I think that should comfortably cover inflation.
Go for it.
Post piccies.
😄
Oh yes, and state pension...
If you have a comfortable amount of funds that would give you the time needed to get good enough at doing something you enjoy until you can start making regular money from it.
About 10 years ago I started being a handyman, got into assembling flat-pack furniture for people and moved into designing and building wardrobes and stuff. Now I spend about 3 days a week making good furniture that I'm proud of and which customers keep coming back for more and recommending me to their friends. It took a few years till it made much money but it's a lot better than watching daytime TV!
Edit: Having just seen the above, I'm 67. We still go windsurfing and mountain biking in Tarifa (Europe's windiest beach) every year and places like Costa Rica and Sri Lanka for the reliable waves for the surfing. Keeps ya young!
Speak to people who have retired and one thing shines through, they all say you need far less money that you imagine.
Maybe when you're older, but right now (at 50), my holidays are limited by the 5 weeks a year I get, if I didn't work I'd want to be off doing stuff all the time, which would cost a lot more.
I could spend a small fortune on B&Bs etc....
@footflaps, yes, as with everything on the internet - the bullshit accumulates at a huge rate.
But, I found some of the spreadsheets useful and the discussions on safe withdrawal rates and the like.
dantsw13
Have a look on the which pension drawdown calculator.
Following links from that, I found this which is very useful & helps validate my own conclusions (55 in ~3 months!)
the problem with retiring is – you’ll need to do something with all that free time
I've been retired four years now and haven't had the slightest problem filling my time. I also know loads of retired friends and a quite common remark amongst them is "I can't believe I ever had time to have a job".
You don't need to be spending much money either. Once the coke and hookers novelty wears off (roughly six months for most folk) you'll find loads of cheaper ways to fill your days. Lack of imagination is the only reason not to.
I'd def try and reduce days working to start with, you might find you enjoy work more if doing less of it (and find retired life is more boring than you first thought - if having to watch the pennies). And maybe start recording your outgoings for a few months to make sure you're spending what you think you are :p
I looked at this recently and we worked out what salary we would want. We said current take home. Then worked out how much we could release by downsizing the house and other savings.
There are extra things to spend money on and spending reductions in retirement. The Mrs and I have spend most of our retirement locked down and it is very inexpensive. I think when you only have so much free time you tend to try to get the most out of it which can involve expense, when you have lots you aren't as frantic to do stuff. But for me, giving up work was more than just not doing a job, it was also letting go of the urge to be productive, which had kind of extended to my leisure time. In different circs., we would have spent more on travel (but we would have tried to get the most out of out old gits travel cards as well). But I have found space for a good bit of idleness in my life which I am enjoying at the moment (just as well really).
It does really depend on what you are going to end up wanting to do with your time, which may not be apparent at this stage.
