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The goal - some 15 years away - is £45k between the two of us, including state pensions.That should give us a pretty comfortable lifestyle.
This should be doable, but we were very late starters on the pensions front, so saving hard now.
I suspect we will likely see reduction in need over the years, it could be 50k in first few yrs, then mid 40’s once kids are away from home, then when state pension kicks in a further reduction in drawdown from the pot. Not many people are as active in their mid 70’s as they are in their early 60’s, so cost of living comes down. I’m not planning to provide for care costs if and when.
£45k ! £50k ! We haven't had that kind of income since 2002 when I stopped work yet we've got junior through 5 years of higher education paying everything (no loans), bought new cars, made the most of 16 weeks holiday a year, kept a horse, had active social lives and run a holiday home. However, we don't drink, smoke or eat out, and have never had a mortgage. We'd be fine on £25k and any more will be squandering money. Is Britain really that expensive or just your tastes? 😉
we don't drink, smoke or eat out, and have never had a mortgage.
I think that’s the key to your numbers, and pretty atypical of the demographic on here.. I think most would tick 2 or 3 of those as things they do do/have.
£45k ! £50k !
45k between two gives 22.5k each, which is comfortably below the UK minimum wage. You can argue that this is a high roller's income if you like, but you might be in a minority.
Are we talking after tax income ? I had to go through my mother's financies with her when my father died. She has around 15k but it'll be enough.
I wish I had the discipline to consider retiring on a joint expenditure of £40,000.
edited to avoid being shamed off the thread for excess
£45k ! £50k !
45k between two gives 22.5k each, which is comfortably below the UK minimum wage. You can argue that this is a high roller's income if you like, but you might be in a minority.
I'm sure this has been said before, but you need a lot less income each year if you're -
- no mortgage, house fully furnished
- not supporting children
- are spending not saving (ie not paying into a pension, ISAs) and are not paying down any other debt
- have accumulated a lifetime of decent enough 'stuff', clothes etc etc.
You're also paying less tax than before - no NI for a start (at present), and potentially 25% of your pension income is tax free, as well as any income from savings as ISA's
It's still going to depend on your lifestyle, and whether you've got some savings to dip into for the occasional big expense. But I'm amazed how much people think they need to live on when I look at my own income and lifestyle now.
run a holiday home. However, we don't drink, smoke or eat out, and have never had a mortgage.
Go on then..I'll bite.. How were the holiday home and house purchased?
I spend about £22k-£24k per year on average not including mortgage repayments or large home improvement projects (new kitchens, bathrooms etc).
Wife spends a bit less, about £16k so £40k combined after tax would be enough to maintain our current lifestyle, which is fine, and I'd like to think we could trim that by a good few grand if necessary.
I just got home and checked. We're actually targeting a post-tax income of about 36-38k between us, plus a rainy day fund for repairs etc.
^^^ yep, same ballpark after tax. There was a similar debate on this thread back in the summer and these levels of numbers were the norm. All based on a couple, no dependant kids, mortgage free and no other big debts, ages early 60’s.
19k here between us...... and doing fine. just eating my jam on toast for tea............... ;o)
£45k ! £50k ! We haven't had that kind of income since 2002
That is getting on for a quarter of a century ago! Adjusted for inflation £50k is about £95k today. I would be willing to guess that whatever job you were doing that paid £50k in 2002 isn't paying £95k today.
Go on then..I'll bite.. How were the holiday home and house purchased?
On Norman Tebbit's advice we set out for France on touring bikes with enough money to rent premises for 3 months. We ran a business for 10 years and didn't count the hours. I also concurrently worked for Lindt for five years. Sometimes I'd walk out of a management meeting at the chocolate factory, do 33 hilly kms in an hour, shower, and then work with clients in our business till 9pm, then get on the bike at 6:30am and ride to the chocolate factory. Banks weren't into lending us money so we just saved and then bought property. We knew we couldn't keep it up because junior had arrived so Madame took a teaching qualification and we wound up the business.
Since then we've lived on Madame's teaching salery, she's bright and got agrégation. I took a year off to look after junior but found we could live on her income so never worked again.
I had adjusted for inflation robola. I'd reckon we were around £45-50 after tax in today's money with the company paying the rent and utilities.
Error post
Ok, so you owned two houses ( or perhaps just one). That explains how you were able to live on so " little" money. It's not really anything to do with cigarettes or booze 🙂
That's exactly what I said. I've said nothing untrue or misleading, people just had to read. I've clearly said no mortgage in all my posts. No rental income, we don't rent out. We coped on 35k even when junior was in Berlin on Erasmus and paid for another year there for him to make music (borrowed free horses that year).
A lot of people on this thread will be in the same position as us when the retire with mortgages paid yet some still think they'll need 45-50k. Ton and his wife live well on 19k and I've said we'd get by on 25k even with a horse and two homes to maintain.
So I'm surprised by how much some people think they'll need, that's all.
You don’t drink, or eat out. For many that might add on quite a few £ a month, certainly does for us.
on the maintenance of 2 houses, are these in the UK ? Simple maths would suggest if they were, per house, council tax £200 per month, utilities £100 per month, basis maintenance £50 a month, so that’s £8400 per annum, so a third of its away, before you add in your horse stabling/food/vet bills etc.
That I understand, iainc, which is why I said we didn't. Eat out a couple of times a week and 5k is easily spent, A couple in the family get through much more than that, but it's discretionary spending so it comes down to how how hard are you prepared to work and save now so you can eat out regularly when retired. We sometimes get all extravagant and buy a menu Kebab for 6e each then walk to the local park and eat them watching the sun go down over the Pyrenees. 🙂
Understood, we all have different priorities and perspectives.
I see you've added about the cost of running the properties. They're in France. The house isn't far off your £200 per month in tax and insurance. The utilities are neutral, the solar panels more than cover leccy including car charging, there's solar thermal hot water most of the year, water is covered by the electricity surplus, heating is free wood, I do all the maintainance, no broadband or subscription services - just phones - say £2700. The ski flat is more, say £3500 - so a quarter rather than a third of our liveable income. The horse stabling is 170e a month if it's used by the riding school for some classes, shoes 80e every two months, vet bills random.
This is quite an interesting exercise, I don't normally worry about the detail if the current account looks OK. 😉
So I'm surprised by how much some people think they'll need, that's all.
Well I'm impressed by your hold on expenditure levels.
I think it's partly fear of the unknown and knowing you can't top it up if it runs out ( that makes my wife not want to retire)
two homes to maintain.
Plus the income of second home?
I think it's partly fear of the unknown and knowing you can't top it up if it runs out
yes, I think this is the bit that gets me too. The pot is a finite amount, ever decreasing. What if the house needs a major roof repair, or a similarly expensive life event that wipes out a year or more of pot drawdown. Similarly a big stock market dive, though with time that would even out most likely.
I am just trying to not think about it too much, life has aha it of throwing curved balls anyway..
no mortgage, house fully furnished
- not supporting children
- are spending not saving (ie not paying into a pension, ISAs) and are not paying down any other debt
- have accumulated a lifetime of decent enough 'stuff', clothes etc etc.
Yeah, it is difficult to see that far at this point. Retirement for us is (hopefully) 15 years away, and we're still paying a student loan and a mortgage. It's hard to envisage what things will look like as we get closer.
Plus the income of second home?
Jeez people are hard of reading. 😉 I said that we never rent out. That could change I suppose but I'd have to feel very poor to accept the hassle that goes with renting out, I'd rather sell.
45k between two gives 22.5k each, which is comfortably below the UK minimum wage. You can argue that this is a high roller's income if you like, but you might be in a minority.
I think this partly explains why there is such a range of attitudes.
Yes when you put it like that 45k doesn't sound a huge amount, but ....
The minimum wage earners are paying half their income on rent, while trying to save for a house (and their future million pound pension pot rofl rofl), they may have a pipe dream of bringing up children though if they keep working the childcare costs will exceed their earnings for 5-10 years. Plus, the actual costs of the children themselves (I've heard they aren't exactly cheap).
The pensioners have a house with a mortgage paid off, they have no childcare costs, no rent, no need to pay into a pension pot, no NIC. (not all pensioners but certainly most with million pound pension pots)
They may have been a bit nervous about "only" having min wage to live on but they actually have very little to spend it on besides grocery shopping and regular holidays.
As someone who did retire early and whose investment income is far below what we were earning when in work, I'm telling you, the money just piles up. Really.
As someone who did retire early and whose investment income is far below what we were earning when in work
this is something that really interests me, having retired, or maybe part retired, a few months back. Without seeking personal financial information on a public forum, can you share any insights into how much less, as a %, you feel that required investment income relates to income when you and partner were working ?
Agree. We manage on about £24k for two of us, because the house is paid for and our son has left. We also don't have expensive habits; don't drink, rarely eat out, no expensive holidays. I also don't need to buy a bike every year because the geometry is out of date (!).
Saying people only have groceries and holidays to spend money on is wide of the mark.
Many of the bills I have now I will have in 20 years.
Council Tax, G&E, Phone, car insurance, water, food, holidays, house decoration etc These are all going to cost me easily £1500/2000 a month in 10/15/20yrs.
So those 'high rollers' on £45k are still going to feel it.
The question from the OP 'how much' remains as fluid as it was when this thread started.
Many of the bills I have now I will have in 20 years.
similar here.
The retirement living standards material is helpful. Looking at that yesterday it seemed to stop at its top end with personas who had been at the 70th percentile of income (~£48,000 gross pa each in 2024 according to Statista).
The question of ‘how much’ is probably best answered by drawing up a detailed budget. Something that has come up a few times on the thread. If it looks like future income<expenditure then changes will be needed. If future income>expenditure then what’s delaying you?
The 4% model is based on the overall pot not really being eroded. We have been pragmatic with a higher %, more like 6% or 7%, with the proviso that there will likely be a moderate inheritance boost in 3-6 yrs, but no guarantee, and also provision to release a bit from the house in 15yrs, at age 75. Also basing on taking a higher % for the first 5 yrs of accessing pension, until state pension kicks in, and then a reduced drawdown.
we will not want/need as much money at aged 75 and beyond than we do currently at aged nearly 60/55. We would like to leave our house to our kids, but not planning on a pot as well. However, no one knows what life will bring or for how long, so can only plan to an extent.
Makes a lot of sense to me - can be a struggle to model such scenarios, so I end up defaulting to rules of thumb. Reluctant to hand over a load of money for volantgo or whatever it's called when i know if I get round to it, I could build such a model myself!
As someone who did retire early and whose investment income is far below what we were earning when in work, I'm telling you, the money just piles up. Really.
My wife and I are in the same position. (moving back to the UK from France shortly so I'll use UK figures as our pension is a UK Govt one)
We went from a joint income of £70k whilst working to a joint income of £35k when retired. We paid off what was left of our mortgage. We had no other debt. We had the same amount in our hand each month as retirees as when we worked. For us, there is need and want. We do what is 'needed' and a bit of what we 'want'
We didn't need two cars so went down to one. We no longer have two commutes so our joint annual mileage dropped significantly. We no longer pay 15% into our pension, no longer pay NI (I think it was c 10% then)...and then Covid hit....which really showed us what we can live on. Not being ultra frugal...just what is actually necessary to live comfortably without the extras such as eating out, holidays etc. Comfortably do-able on c £1k a month (We lived in a well maintained £250k 3 bedroomed terrace house in the Pennines)
So if we add in bits and pieces, renewing the car every 5 yrs (not with a brand new one) we come to a figure of c £2k a month in our hand. Or £12k a yr each, being a sweetspot for us.
can you share any insights into how much less, as a %, you feel that required investment income relates to income when you and partner were working ?
Accurate comparison is hard and possibly a bit meaningless because our highest earning phase was in Japan with a very different fiscal structure but given that we were saving a ridiculous proportion of our salaries while over there (well over 50% overall), dropping by that amount hasn't had any impact at all. I mean, it's just a matter of working out what you actually spend on your normal life activities on a day to day basis.
i am currently spending 99p per day on a pret filter coffee mid ride............ 😋
Council Tax, G&E, Phone, car insurance, water, food, holidays, house decoration etc These are all going to cost me easily £1500/2000 a month in 10/15/20yrs.
So those 'high rollers' on £45k are still going to feel it.
How does that maths work then? Your costs are 18-24k so 45k isn't enough?
It’s a pretty basic version but I’ve just calculated that 65% of my take home pay currently goes on expenses I won’t have in retirement (mortgage + overpayments, pension, mortgage life insurance car finance payments, income protection. Bearing in mind a chunk of my salary is also taxed at the higher rate I could probably get by on about a third of what I earn now. Although by choice will plan for more like half.
It’s a pretty basic version but I’ve just calculated that 65% of my take home pay currently goes on expenses I won’t have in retirement
I have just looked at our figures, and I think that, once I take out that stuff (and the cost of having two dependants at home), I could probably get by on state pensions given how much I (don't) have spare these days anyway! Another consideration (going back to talking of downsizing which we are in the fortunate position to be able to do), is that other costs such as heating, council tax, cost of maintenance etc would also reduce fixed overheads.
Edit: Just done a quick calculation, and I think we would actually be slightly better off (we do both have small pension pots that will probably be worth about £250,000 in total by the time we retire)
Some interesting numbers above. And don't forget in all this the relevant question isn't really "will I be able to live the life of Riley and go on 6 month round the world cruises twice a year drinking champagne all the way?" but more likely "do I need to work another 5-10y in this stressful job I resent in order to have a better pension over a shorter retirement period in which I've just missed out on the best 5-10y of my remaining good health?"
Yep, probably the most relevant question really!
"do I need to work another 5-10y in this stressful job I resent in order to have a better pension over a shorter retirement period in which I've just missed out on the best 5-10y of my remaining good health?"
Word....!
Quite like my job and the lads I work with. Didn't like the fact I was working more than I was doing other things I enjoy.
I look at many older folks and they've the money, but not the health to really enjoy their retirement in any active way. I don't fancy reading newspapers, going to the theatre or watching TV as a past time.
job I resent in order to have a better pension over a shorter retirement period in which I've just missed out on the best 5-10y of my remaining good health?"
nail on the head. this was my reason for calling it a day at 55.
i had serious health issues in the past, which scared me. so when the new grandkids came along my first thought were, i ant to spend some quality time with them whilst still healthy. so i stopped work and we looked after them pre school so their parents could work.
on a side note...... my father in law never did anything with the our kids. he worked up to being 67..... weekends, overtime. everything. not that he needed the cash. house was bought for cash £2k new in 1964. he worked because he is a miser and greedy, nothing more.
now he is 84. had a small stroke, done nothing about it, done nothing since retiring. sits in his chair with a sad mournful cloud over his head.
i never ever want to be a man with money with no enthusiasm to spend it enjoying life.
i would rather be skint, eating picnics in the garden with my grandkids.
A bit of an opposite to this thread (and likely, most posters on it)
Ive been putting a little bit into A SIPP for the last 18 months, to supplement my civil service pension when it comes or allow me to retire ever so slightly early and not draw that CS pension until its due.
I just checked its growth, cripes, I can't see almost 10% being sustained. I feel we may be heading for a 'realignment'.
Thing with the big houses, is they were the family home and people don't want to live anywhere else. We tried that with FIL and MIL, but they didn't want to move. By the time it was sort of needed it was too late. MIL lived in the lounge and slept in the dining room in later years. The four bedrooms were never used. My folks are rattling round in a large five bed house but they won't downsize. Dad is starting to struggle with the gardens.
My in-laws sold their big family home (with even bigger gardens and fields) that they renovated from a dilapidated shell – so they had massive emotional ties to it. Once they accepted they couldn't manage it anymore, they were soon over it and now realise that it was the best thing they could ever have done.
""do I need to work another 5-10y in this stressful job I resent in order to have a better pension over a shorter retirement period in which I've just missed out on the best 5-10y of my remaining good health?""
Part time may work for some. I have been part time for 16 years. Currently around 20hrs a week over 3 days. Evening or weekend work so I can do my cycling/jogging/walking in daylight all year round. I have managed a few multimonth bike tours using holidays and unpaid leave. In fact my only grouse with my current boss (senior not immediate) was that she refused to let me have unpaid leave so my last bike tour was only a month.
My work colleagues are all pleasant and the job is low stress. Aiming to retire fully just short of 67 in 2 years time. I don't feel I have missed anything not being fully retired.
Still in good health and touch wood years of health left. My dad was walking round the golf course at 89 and still bivvying on mountain tops in his 70s.
In fact come to think of it he went part time around 53. Fewer hours than I do as he was in a job he could do consulting. So 36 years of active semi-retirement.
Contrasting some of the answers here with those on the ‘rich’ thread. Rich enough to retire early ?
I've just started drawing an income from my SIPP to cover the few years til my Teachers pension kicks in. I've now got another reason to earn less from p/t work, as it will put more of the pension payments under tax free personal allowance. Ton's comments here clinched it - more time, less consumption. I've got nearly 200 Munros to drag myself up (along with other hills), just bought my wife an ebike as she wants to do some bike travel and my Dad needs more care.
can you share any insights into how much less, as a %, you feel that required investment income relates to income when you and partner were working ?
From back when I was working full time to the current day, my total income, is down by about 60%. If I'd carried on working for a further 10 years my salary would have been larger too (plus inflation). Looking at my wife's mate recent retirement, she's down by about 50%, though it's a much smaller amount regardless.
Thanks scotroutes. I think I should have posed the question as comparisons of net income pre and post retirement, as gross income while working may have a significant contribution going to pensions and other savings, along with possibly high rate tax and NI.
In my last couple of years working I was able to pay around 30% of my gross income to my SIPP via salary sacrifice for example, which along with tax and NI brought my net income down fairly substantially, although it was still a fair bit more in the bank every month than I’m currently projecting my income once I’m using my pension for monthly drawdown.
In my last couple of years working I was able to pay around 30% of my gross income
I'm currently paying about 127% of my net into my pension. I've got to admit. It confuses hell out of me!
^^ how does that work then ?
I'm not in the UK so my pension/savings/investments don't map directly to those in the UK but I'm in a similar situation to you.
I retired just over a year ago, and I'm anticipating* my post-retirement net income to be about 90% of my pre-retirement net** income.
Age 62, own home, no mortgage, no debts, no kids. Mrs Vlad is still working (for at least another 18 months) and she will have two reasonable defined benefit pensions when she's 60.
Ultimately, I'm aiming for a net income in a similar ball-park as pre-retirement but this is only possible as I was pretty frugal before retirement and I'm happy to be frugal, if needed, post retirement. I'm also quite heavily invested in US EFT so this may all go horribly wrong at any moment 😀🤔
* I say "anticipating" because I haven't been retired for a full tax year yet and I've got a mixture of a modest defined benefit pension and other discretionary sources. My DB pension just about covers my mandatory, regular monthly outgoings so I've been topping up my pension from savings when needed, but I still need to work out how much extra I'll need to pull out of my investments this tax year (mostly for tax efficiency purposes). I'll also have two small state pensions at 65 and 67 to look forward to.
** My definition of net being after tax AND after contributions to savings and investments, which were a large proportion of my salary.
My aim is to have about 2/3rds of my current net income (including state pension) but reckon even half should be OK, I just don't want to scrimp and save in retirement like we have all my working life. We currently spend about a third of our income on mortgage and car loan which we won't have (ending soon 🙂 ), hence plucking the 2/3rds figure from that, allowing us to live as we currently do. However we are still paying for 2 grown kids at home( last year of school and 2nd year of uni), so again, when they move on in the next few years that frees up more, hence plucking the 50% figure from that and TBH that's not far of what we would both get in state pension alone, hence looking at going at 60 and financing the 60-66 gap, there is actually a benefit payment you can claim at 65 in ireland, so I really only need to cover 60-65.
Thanks, yes, the grown up kids at home is a thing indeed. In my situation the only thing that has changed is my employment status - we are obviously in same house, no mortgage, boys both working and living at home/at partners a few nights a week etc. wife still working part time.
cars are new and no finance, no other debts, but… we do spend a lot on general stuff, no doubt a learned habit from being fairly cash rich. Trying to adapt to a leaner way of life has some challenges for all of us currently..