How much money do you need for retirement/pension?
Discussion
GT03ROB said:
Most of those costs I don't have while working! Hence why I'm not always convinced by this spend far less in retirement argument!
In which case for you your going to need a very high % of your usual salary to sustain the lifestyle you have. Be it from savings state pension and company pensionWelshbeef said:
GT03ROB said:
Most of those costs I don't have while working! Hence why I'm not always convinced by this spend far less in retirement argument!
In which case for you your going to need a very high % of your usual salary to sustain the lifestyle you have. Be it from savings state pension and company pensionsociopath said:
2k in total.
No mortgage or cc bills, so literally that's our outgoings before cars, bikes, beer etc
That's good going, I retired in January but am currently living on about 1.8k a month plus my wife's full time teachers salary. My TVR will be up for sale soon though as I'm not using it, that will reduce my outgoings! No mortgage or cc bills, so literally that's our outgoings before cars, bikes, beer etc
CoolHands said:
Bump
this thread has the right title although I can't see an answer to my question which is not how big should your pension pot be, but:
How much money do you reckon is a decent amount per month? (in today's money) ie for an average type middle-class lifestyle as we all are here on PH. I know there's a million what-ifs. Mainly around if you've paid off your mortgage or need to rent forever, I suppose. But like, 800 a month? a 1000? 1500?
https://moneyfacts.co.uk/news/retirement/pensioner...this thread has the right title although I can't see an answer to my question which is not how big should your pension pot be, but:
How much money do you reckon is a decent amount per month? (in today's money) ie for an average type middle-class lifestyle as we all are here on PH. I know there's a million what-ifs. Mainly around if you've paid off your mortgage or need to rent forever, I suppose. But like, 800 a month? a 1000? 1500?
"According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement."
Edited by xx99xx on Monday 22 June 12:22
I earn a decent-enough salary (I wouldn't say it was huge but according the the Institute for Fiscal Studies I earn "a higher income than around 96% of the population"). With a small 2 year gap, I've paid into pensions since I was 19 and I'm 60 this year.
I have access to a very detailed pension cashflow modeller. My current projection is that I will actually be able to nett as much, if not more, than my current salary per month starting from this year, and allowing for inflation and growth of my pot at conservative rates, I'll still have some cash in that pot when I'm 85 if I draw that amount for the full 25 years (which I don't expect to because by the time I'm 80, if I get there, I'll only need a packet of Rich Tea and some tea bags each week
).
So when you take into account losing all the commuting costs as listed somewhere on this thread, no mortgage, etc, I'm rather looking forward to jacking it all in very shortly!
I have access to a very detailed pension cashflow modeller. My current projection is that I will actually be able to nett as much, if not more, than my current salary per month starting from this year, and allowing for inflation and growth of my pot at conservative rates, I'll still have some cash in that pot when I'm 85 if I draw that amount for the full 25 years (which I don't expect to because by the time I'm 80, if I get there, I'll only need a packet of Rich Tea and some tea bags each week
). So when you take into account losing all the commuting costs as listed somewhere on this thread, no mortgage, etc, I'm rather looking forward to jacking it all in very shortly!
xx99xx said:
CoolHands said:
Bump
this thread has the right title although I can't see an answer to my question which is not how big should your pension pot be, but:
How much money do you reckon is a decent amount per month? (in today's money) ie for an average type middle-class lifestyle as we all are here on PH. I know there's a million what-ifs. Mainly around if you've paid off your mortgage or need to rent forever, I suppose. But like, 800 a month? a 1000? 1500?
https://moneyfacts.co.uk/news/retirement/pensioners-need-a-33k-a-year-income-to-enjoy-a-comfortable-retirement/this thread has the right title although I can't see an answer to my question which is not how big should your pension pot be, but:
How much money do you reckon is a decent amount per month? (in today's money) ie for an average type middle-class lifestyle as we all are here on PH. I know there's a million what-ifs. Mainly around if you've paid off your mortgage or need to rent forever, I suppose. But like, 800 a month? a 1000? 1500?
"According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement."
xx99xx said:
https://moneyfacts.co.uk/news/retirement/pensioner...
"According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement."
Fixed the link."According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement."
I think it depends on your standard of living prior to retirement, and what you want to do afterwards.
My last full-time job was 11 years ago. I had no debts of any kind at the time and still do not. In terms of actual expenditure I have seen no change at all.
I still do some Board work, and in Non-Covid times fly maybe once a month for business.
I had no "bucket list" (hate that term) so had no catch up to do or dreams of a year's travel or the like. I still travel about the same a mount as when I world full time, still have cars and trackdays and so on.
If you have pension for instance, then for me the right calculation is how much do you need from investments to make up the shortfall from your full-time income. I do not count a house as an asset as you have to live somewhere, and if you. end up in some kind of retirement home selling the house may well be needed to fund that transition.
My last full-time job was 11 years ago. I had no debts of any kind at the time and still do not. In terms of actual expenditure I have seen no change at all.
I still do some Board work, and in Non-Covid times fly maybe once a month for business.
I had no "bucket list" (hate that term) so had no catch up to do or dreams of a year's travel or the like. I still travel about the same a mount as when I world full time, still have cars and trackdays and so on.
If you have pension for instance, then for me the right calculation is how much do you need from investments to make up the shortfall from your full-time income. I do not count a house as an asset as you have to live somewhere, and if you. end up in some kind of retirement home selling the house may well be needed to fund that transition.
Mazinbrum said:
That's good going, I retired in January but am currently living on about 1.8k a month plus my wife's full time teachers salary. My TVR will be up for sale soon though as I'm not using it, that will reduce my outgoings!
1st rule of TVR ownership; you can only sell your TVR if it's to fund buying another TVR.
When she's no longer in the garage you'll miss her.
Read an interesting article on the impact of QE in the long term. It argues inflation is the spectre we need to be aware of - the £1m pot people aspire to will - even taking into account the passage of time - be worth less:
"As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
"As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
brightmotiv said:
Read an interesting article on the impact of QE in the long term. It argues inflation is the spectre we need to be aware of - the £1m pot people aspire to will - even taking into account the passage of time - be worth less:
"As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
Not sure how they have got those figures so guessing they are based on annuity rates which the majority of people shouldn’t consider. Drawdown and a long term growth rate of 3 or 4% should sustain a comfortable £30-£40k pa off a pot of £1m."As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
craig1912 said:
Not sure how they have got those figures so guessing they are based on annuity rates which the majority of people shouldn’t consider. Drawdown and a long term growth rate of 3 or 4% should sustain a comfortable £30-£40k pa off a pot of £1m.
That's maintaining the capital as well. Realistically you'll be able to draw more than that unless you're planning on living to 150 
brightmotiv said:
Read an interesting article on the impact of QE in the long term. It argues inflation is the spectre we need to be aware of - the £1m pot people aspire to will - even taking into account the passage of time - be worth less:
"As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
Whether it is true or not, what else are you going to do?"As long as central banks pump in liquidity by buying bonds, then all prices rise. But that means yields decline, meaning investors have to take greater risk to garner any meaningful returns....The consequences of financial repression will be high. Twenty years ago, a £1 million pension pot could pay you £100,000 a year. Five years ago, It might have got you £40,000. Today, your same £1 million pot will probably pay you £10,000 – which will feel very unfair when final-salary government pensions will be bankrupting the nation."
https://capx.co/qe-addicted-markets-will-not-get-u...
Is this alarmist? Should we all be factoring the likely second and third order effects of QE into our retirement plans?
There are so many unknowns with pensions. My view is just pay in what you can, take the healthy tax relief whilst it is available, and see where you end up. Difficult to do much than this.
The reason I’m asking about monthly income to aim for rather than size of the pot is I am in the fortunate position of having defined benefit pension. I’m currently at £15k pa with it, so just wondering what I need to get it to ie what age I can retire when I get it to, say, £20k or whatever. Although I will need to subtract the % reductions from taking it early as f
ked if I’m working to 68. I prob need to get to £25k so it is about £20 if I go 5 years early after actuarial reduction
ked if I’m working to 68. I prob need to get to £25k so it is about £20 if I go 5 years early after actuarial reductiongaryhun said:
craig1912 said:
Not sure how they have got those figures so guessing they are based on annuity rates which the majority of people shouldn’t consider. Drawdown and a long term growth rate of 3 or 4% should sustain a comfortable £30-£40k pa off a pot of £1m.
That's maintaining the capital as well. Realistically you'll be able to draw more than that unless you're planning on living to 150 How much does one need per month?
Everyone will vary: I reckon our regular monthly essential outgoings amount to around £800pcm......where the other 30k goes, I've no idea
Just kiddin'....
There is food and ents on top of that.
A decent chunk of money after those things is currently into various investments, including ISAs and pensions. Of course when one steps back from the race of rats, one can cut down much/all of that.
In answer to the recent question - I run numbers for 3 options: tight retirement, decent retirement and proper comfy. I'm not aiming for the tight oe, but if (for example), I was already retired when Covid hit, I might aim to shutter down for a year on that level.....
If we exclude crazy vehicular purchases and frivolous round the world 6 month jaunts, I reckon they hit about £1,600, £2,200, £3,500 pcm for us. Naturally I am therefore targeting £5k pcm to live on
It's easy to identify what one is spending money on at the moment that will go (commuting, office lunches etc), but it's hard to estimate what one actually wants to do with all the additional leisure time and what it will cost.
My suspicion is that it costs a lot more than people think, and that you keep wanting an active (and expensive) lifestyle far longer into your 70s and 80s than you estimate at the outset.
Maybe because when you work all week sometimes you want nothing more than to sit the garden of a weekend and relax. I guess the trick is finding things that are enjoyable and/or fulfilling that don't cost anything (volunteer work?)
My suspicion is that it costs a lot more than people think, and that you keep wanting an active (and expensive) lifestyle far longer into your 70s and 80s than you estimate at the outset.
Maybe because when you work all week sometimes you want nothing more than to sit the garden of a weekend and relax. I guess the trick is finding things that are enjoyable and/or fulfilling that don't cost anything (volunteer work?)
craig1912 said:
Not sure how they have got those figures so guessing they are based on annuity rates which the majority of people shouldn’t consider. Drawdown and a long term growth rate of 3 or 4% should sustain a comfortable £30-£40k pa off a pot of £1m.
garyhun said:
That's maintaining the capital as well. Realistically you'll be able to draw more than that unless you're planning on living to 150
EddieSteadyGo said:
Whether it is true or not, what else are you going to do?
There are so many unknowns with pensions. My view is just pay in what you can, take the healthy tax relief whilst it is available, and see where you end up. Difficult to do much than this.
Thanks all for your builds, useful.There are so many unknowns with pensions. My view is just pay in what you can, take the healthy tax relief whilst it is available, and see where you end up. Difficult to do much than this.
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