Can we retire please? How much money do you really need need?

[Boringfrog]

Does that depend on the type of pension you have, such as one targeted for drawdown (flexi-access drawdown or similar) as opposed to annuity?

I am 50, largely clueless about such things, so will watch this thread with interest given my pension pot growth is less than reassuring...

50 is a good age to start putting more into your pot. I semi retired in 2007 at 44 and wished I'd got advice on pensions/ISAs etc.

 

[tuscancouple]

is to miss out the contingency pot.

Being very lucky to have paid the mortgage

So there's your contingency pot should it be needed. The house could be sold for a downsize or these days there's the lifetime mortgage where you pay the interest only or pay interest and capital. So either way you have contingency options. I'd keep away from equity release though

Mick

 

[MisterB]

When I retired about 9 years ago, we invested my tax free sum into properties. This now provides more income than my wife was earning, so she retired in her mid fifties and now has a 'property' business. We are extremely lucky and others don't have the opportunity to do what we have done. My comment to anyone thinking of retiring early is that there are NO get rich quick schemes and spread any investments you make so you're not reliant on one income stream.

 

[Sundowners]

One important thing to remember is to not treat it as a holiday, it will cost a lot less. If you are able, keep about 10k in a pot somewhere, you can fall back on this if sh*t happens. If you give yourself a budget of £300 a week and you go over, the next week cut back on miles, food (use the stuff you have in the cupboard for a rainy day), dont eat out that week if that is your thing. We strive on finding bargains, don't go on campsites, wild camp for a few days. Pull your horns in, tighten the purse strings, get my drift.

 

[buttons]

You can spend too much time working it all out and leaving it just one more year then another then another. I retired a long time ago in my early 50s, never done a pension calculation or forecast. If you want to retire just do it, life is too short to sit about doing calculations. If you have serficient each month to pay the Bill's then everything else will fall into place. My only regret is that I didn't do it ten years earlier.

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[HandyAndy]

I've got to work another 7 years before being entitled to the full new state pension.
£168 a week ??

 

[PJGWiltshire]

We have been full time since April 2015. We have found that our way of life costs around £1400 per month. living in the UK. That figure drops whilst on mainland Europe with use of the free Aires and over time by concentrating in staying in a particular area for long periods that costs drops as fuel lasts and we budget for one full tank per month.
We are not of state pension age and have a work pension to live on with a nest egg to fall back on and money put aside to buy property when we need a home.
Meeting many other travellers, who do long periods in their vans, everybody have their own standard of living requirements. One expense we are now having to deal with is replacement of quality clothing that after five years are worn out and need replacing. These simple expenses can now impact on expenditure.

My only thought to consider is if you are leaving an empty house to come back too, the basic running cost of the empty property will impact on outgoings.
We sold our property but have not spent the proceeds. We will keep an eye on house prices in the area where we intend to locate and if house prices start increasing we will need to reavailuate our poison.

The only thing we can say is GO FOR IT.

 

[Snowbird]

I have been retired 20 years this coming May having retired on my 50th birthday. To be honest, I have no idea how much it costs to retire early, all I know is, every time I go to the hole in the wall money comes out.

 

[Nanniemate]

I am reading this with interest and have looked at the predictions and find it interesting that they are above what many people earn in my area. I only have the benefit of one income plan no just do it and if you run out of cash well spend the kids inheritance.

 

[Wh05apk]

I'm in a similar position, 55, running my own business so working silly hours, but only now is the money coming good, do I work another couple of years and build a nice pot or retire now, I could probably "survive" if I retired now, but I don't want to "survive", in a few years when we need a new car or van, I want to be able to get another.

For those of you talking if downsizing, don't forget equity release, rates are currently very low, downsizing will likely cost you £20,000 in estate agents/solicitors/stamp duty, costs etc, so it could be an alternative.

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[Cheshirecat57]

Some may knock equity release, but that is the backstop that you should end up with

If any money left for the “children” ( who will be 47 & 44 when I reach 70) then I got my sums wrong

Original OP asked “ how much” is enough, well in my case with all toys/house paid for, then £1000 a month would do, £1500 nice and £2000 month would be great

Part time work-of-choice @ minimum wage will top me up

 

[Cheshirecat57]

I might add, Im 62 and going to 3 days from Jan
( 24/7 as I have christened it- 24 hours every 7 days)

My wife , however, refers to it as Tuesday,Wednesday And Thursday... TWAT for short

 

[Fragle]

Excellent advice everyone.
Ive worked out our expenses at £12000 for the year. (all current bills) that also includes £100 per week for food. ( drink a little no smoking)

£6000 per year for extras until pension kicks in at the full rate as we both have full contributions.
The motorhome is new (third van) and we have no intension of changing again. car is ok and no need to replace.
As we have no need to get people in to do any work. I do it all fortunately.
We are looking at the £6000 really as back up and holiday costs. Being someone who would generally use free aires whenever possible I think this may well be enough

 

[Boringfrog]

I've got to work another 7 years before being entitled to the full new state pension.
£168 a week ??

You also have 7 years to pump some money into a private pension.

 

[Howard B]

I am looking at calling it a day in three years when i hit 59. Currently chucking half salary into pension pot & planning to downsize the house. Reading through this thread, we seem to be way over what is needed to live reasonably comfortably on.

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[nicholsong]

Very helpful. Thanks. Are you allowed to take lump sums of money from your pension pots every year ?

You can only draw a total of 25% of the pension fund tax-free but that could be split over several years. The rest can nowadays be drawn as lump sums once over age 50/55(?), or as income but both are taxed when drawn out.

Fragle you have not said how much you expect to have in pension payments(employment, State and private) and how much capital you would have on top which could act as both an emergency fund and as a source of additional income.

To me £15k sounds very frugal, but it depends on things like Council Tax rate, motor insurance rate in your postcode etc. Where my house is in London if the two of us lived there the Council Tax would now be close to £3,000. Heating and electricity would probably eat up another £2,000 even if we were away for 4-5 months.

We do not spend all our income but probably spend about £25-30k a year, but that is living quite well, but Poland is cheaper than UK.

Geoff

 

[PJGWiltshire]

Excellent advice everyone.
Ive worked out our expenses at £12000 for the year. (all current bills) that also includes £100 per week for food. ( drink a little no smoking)

£6000 per year for extras until pension kicks in at the full rate as we both have full contributions.
The motorhome is new (third van) and we have no intension of changing again. car is ok and no need to replace.
As we have no need to get people in to do any work. I do it all fortunately.
We are looking at the £6000 really as back up and holiday costs. Being someone who would generally use free aires whenever possible I think this may well be enough

Go for it, see you on the road.

 

[Sandancers]

Having retired for the second time in March our income is quite adequate, but it took us (well the Mrs mostly) a bit to change the mindset from having an excellent monthly income to a more modest one. While having decent savings to fall back on I want to use our monthly income as if it were our only income and the thing which tends to catch us out is stuff like needing a new pair of glasses or new winter coats. Stuff which might cost a couple of hundred quid, but which you never thought about to put on the "outgoings" list.

Birthday presents and Xmas presents for the family also tend to not be on the spreadsheet !!

It's the holidays which we'll probably dip into the savings for, but I'd rather spend the savings that way than have the Gov. possibly get their hands on them in the future.

 

[Puddleduck]

When we were in a similar situation we put together a dossier of all our pensions and savings and took advantage of a free consultation with a Financial Advisor. The first couple of hours was free and after that there is a charge - 0.5% per annum of the investments we have with him and this is covered several times over by the income from the investments . We have an annual review (just done that last week) and even with the bad times we still have about the same as we started with and we have been retired and drawing down the self invested pension for 4 (?) years. The projection is that at the present draw-down for the next couple of years (and then a decrease when state pension kicks in), no increase in fund valuation and ignoring inflation the fund would not run out until we were over 120. Anything left in the fund can be passed to our children. This was not a major consideration for us in deciding which way to invest the pension pots but may be for others. Professional and impartial advice may be required.

It's the best thing we ever did as it has meant we could have some quality time when we were fit and active and before my Dad became chronically unwell.

Apart from the worry about my parents we have a lifestyle that suits us and our annual spend is about £16,000 a year. I still keep a rainy day pot of money I can get to in an emergency...... a few thou in an instant access account and a few tens of thou in a notice account apart from the main investment pot.

 

[carolyn]

I retired early at 55 but have a good pension, Nick retired at 60. We have no regrets. If you already have health issues then I think it’s unrealistic to think that if you suddenly find you are short of cash in 5 years time that going back to work, especially hard physical work is going to be an option. Sorry to be a wet blanket but most seasonal work is of that type.
Most of us do seem to find that our outgoings do drop significantly when we retire despite seeming to travel more. Very few of us regret retiring early although a few do. You will soon know. If you do regret it, the world won’t end, just make a new plan.

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[HandyAndy]

You also have 7 years to pump some money into a private pension.

I badly worded that... My bad
I mean I have to work 7 more years to be ABLE to claim the full amount.
not that I have 7 years til retirement.
I have a bit more than 7 years to pay into this new work place pension scheme as I'm only 46 (I think haha) I assume that work place pension is supposed to top up the New state pension not a replacement for it.
Otherwise I am truly buggered
only £20k in my private pension as I stopped paying into it donkeys years ago as I needed the money more, kinda still true

 

[Phod's]

I spent 30 hrs in Fin Services and retired early at 54 following a fall out with a bus. partner who wanted every penny of cash from the business every month......great financial planning hey! So sold up and moved on to be a man of leisure, whilst my wife keeps me......WONDERFUL!!!!
Everyone IS different as are their circumstances so you must take some professional advice..........find and independent financial advisor from recommendations of friends or trusted colleagues and then say what you want but that you do NOT intend to "purchase" pension or investment products and that you want a review and advice only.
If you accept what you hear and like the advisor, if a "product" is actually needed you can decide where you buy it from, the advisor or elsewhere.
Lots say they need 30k per annum and after tax that may be reasonable for most couples but everything depends on what savings, investments/pensions you have and how YOU live.
Lots say they will downsize their home but never do or indeed can.
So......as you'll see, there are so many things to consider and you'll only ever get it WRONG once............so make sure you get it right, get advice and it will be the best money you have ever spent but consider it an investment into you!

 

[Puddleduck]

HandyAndy I have assumed that as I am one of the women most affected by the increase in state pension age the goal posts will get further away and I will never get to draw down a state pension. My works pension was aligned to state pension age and I took a deep breath and decided to take a (much) lower income earlier rather than risk not getting anything at all. Martin is older than I am and he will get his state pension in 2021. I don't think they are allowed to alter the date so close in. My state pension payment date can be changed at any time of course.

[Nowt to do with the original question but no wonder there is a crisis in care for older people when the people who would normally be retired and in receipt of pension and so able to perform basic, and not so basic, care needs for parents can not afford to stop work.]

 

[Puddleduck]

Lots say they will downsize their home but never do or indeed can.

When you retire you need more room for all your interests and hobbies so downsizing is not always a good thing.

My studio has moved from the attic to what was a guest bedroom and Martin now has all the attic for his railway layout.

We already have one shed which houses garden "stuff" and a lathe but next year we will take possession of an old shipping container, the plan is to use that as an astronomical observatory.

 

[Sandancers]

When we were in a similar situation we put together a dossier of all our pensions and savings and took advantage of a free consultation with a Financial Advisor. The first couple of hours was free and after that there is a charge - 0.5% per annum of the investments we have with him and this is covered several times over by the income from the investments . We have an annual review (just done that last week) and even with the bad times we still have about the same as we started with and we have been retired and drawing down the self invested pension for 4 (?) years. The projection is that at the present draw-down for the next couple of years (and then a decrease when state pension kicks in), no increase in fund valuation and ignoring inflation the fund would not run out until we were over 120. Anything left in the fund can be passed to our children. This was not a major consideration for us in deciding which way to invest the pension pots but may be for others. Professional and impartial advice may be required.

It's the best thing we ever did as it has meant we could have some quality time when we were fit and active and before my Dad became chronically unwell.

Apart from the worry about my parents we have a lifestyle that suits us and our annual spend is about £16,000 a year. I still keep a rainy day pot of money I can get to in an emergency...... a few thou in an instant access account and a few tens of thou in a notice account apart from the main investment pot.

When the workplace was offering early retirement some of the workforce had workplace pension pots in the order of one million pounds. Which obviously they could take as a monthly RPI linked pension with or without taking 25% as tax free lumpsum. The other option was to move the money to an Investment Company and take a drawdown income per month again with or without 25% tax free.

Some went one way and some the other. Main reason for moving the pot to an Investment Co was that money might be left for the kids, whereas with a pension if we both die the pension dies with us.

Other than that reason the ones who stayed with the monthly RPI option could not find any financial advantage in moving out. And on some of the figures the Company Pension advisers were showing, that if there was a downturn in markets or high inflation then money could run out before death.

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[The Wino]

We moved last year to a cheaper but nicer area and downsized a bit so we had 200k left over to add to the pot. It sounds like a lot but if you are planning to be retired hopefully for 40 years it's not a lot extra. Of course if you live near London and move to civilization you could have a lot left over.

 

[Phod's]

SEE what I'd said previously........there are so many options and so many opinions BUT the bottom line is this is FAR TOO IMPORTANT to mess around with yourself or listen to what Jonny or Frieda did.
I did mine myself they cry............well I DID but that was my previous line of business and now my investments are low cost because I know what to do BUT if you don't, DON'T!!!!!!!!!!!!!!!!!

 

[The Wino]

When the workplace was offering early retirement some of the workforce had workplace pension pots in the order of one million pounds. Which obviously they could take as a monthly RPI linked pension with or without taking 25% as tax free lumpsum. The other option was to move the money to an Investment Company and take a drawdown income per month again with or without 25% tax free.

Some went one way and some the other. Main reason for moving the pot to an Investment Co was that money might be left for the kids, whereas with a pension if we both die the pension dies with us.

Other than that reason the ones who stayed with the monthly RPI option could not find any financial advantage in moving out. And on some of the figures the Company Pension advisers were showing, that if there was a downturn in markets or high inflation then money could run out before death.

I've had 2 friends in a similar situation. I'm on the other side no final salary pensions but put quite a bit by as we realised quite a while ago that if we spent it we would have to work a lot longer. An added bonus is we are already used to a relatively low spend lifestyle!

 

[Neilfg]

If you have a work or private pension and (to be polite) not fully clued up on it, get advice. Personally I would speak to the various organisations first Pension Advice Service, Pension Wise (Citizens Advice) in the first instance.

Our budget is still a bit in the air as we are still settling into a new house and area, we can adjust lifestyle to suit and so far it is costing much less than when working and living in previous house/area. Our budgetary estimates are similar to OP 14k ish for living and a contingency of 7k for other stuff, hopefully we have over estimated.

 

[tofo]

Are your figures per annum or just a one off.

Ive asked a few if the 25% draw is rolled over to each year but never got a yes or no answer.

I took my pension at 60
drew 25% as a lump sum
and balanced my remaining pension

e g company pension +( state 65page )pension paid by company till 65
then reduced company pension +age 65 pension

my earnings stayed more or less equal if I haven’t done it that way
i couldn’t retire early

the 25% lump sum was mine so the pension company
didn’t do a Robert Maxwell

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