If you were nearly 60, how much money would you need to give up work now?

[AbbyGal]

If you received a large lump-sum inheritance and were nearly 60, own your flat outright, kids all grown up and left home but only a minimal pension too.

I'm wondering how much money one would realistically need.

Sadly not a real scenario, just dreaming I guess.

I'm of a similar age and I think lots of things come into play.
The fact you have a 'minimal pension' would be a big factor.

So state pension doesn't kick in (for me anyway) until 67, and then would be enough to 'get by on'. How do you feel about 'getting by' as opposed to 'enjoying life' ?

How much are all your bills now - food, groceries, haircuts, clothes, presents, bills for TV licence, broadband, service charge (if in a flat) , council tax, insurances, travel, electricity, gas if you have, water rates, and so forth ?

What would you want to do with your time ? Will that cost ? For example, I want to go on a few holidays before I am too old to do so - but that is money I'm not currently spending so is in addition to regular outgoings. What about the rest of the year - are you planning to do things that cost money ? Or stay in (in which case will your heating bills go up ?)

Then it depends a bit how independent your dc are...... would you like to be able to treat them still to some things ? There's a difference between them being all grown up and being completely independent IME.

A BIG factor for me would be how much you enjoy - through to 'hate' - your job. If the idea of going in to work when you don't actually have to is too much, then you would probably get by on a smaller amount. But if your job is fine, then setting a goal of going in - say 3 years - whilst you save into your holiday fund (or whatever your treat to yourself it) is more bearable.

I have been wondering about this long enough to see how a virtual scenario plays out over quite a few years. I reckon that, invested wisely - I would go for mostly FTSE100 trackers but maybe a little in other indices - an optimistic person could expect a return of about 5% a year on average. This would be tricky if there were several years of low returns at the beginning of the retirement as insufficient interest for living would result in a reduction of the capital.

Then you would have to decide how much you realistically would need to live on for the next ... how long are you going to live? Say, 30 years? I play about with this in my head but with no mortgage or rent maybe £30,000 would be enough. This would be subject to tax after the tax free allowance, which Jeremy can't be relied upon to increase annually. You could gradually reduce the tax burden by investing £20,000 a year in a FTSE Tracker ISA. And at 67 you could expect about another £10,000 a year in State Pension (assuming nothing goes wrong with that!), but that would also be taxable. But you would not have to pay National Insurance. Also allowing for repairs to your property, having to live off capital for too long, too early, I'd maybe go for £35,000 to be on the safe side. Which would mean you would need £700,000 capital.

After all those clever calculations there are an awful lot of variables: How much would you really need for the lifestyle you require? Are there other expenses that might come up? How optimistic are you about the returns on the capital? How brave are you about the capital holding up? Would you be disciplined about re-investing income over your £30/35,000 on good-return years to make up for the bad years? Illness? Stock market crash - would it recover soon enough for you? Massive inflation?

How much private pension do you have and when will it pay out?

People do it. Some have much larger 'pots' and live very comfortably. Some are reckless brave. For some the whole idea is terrifying!

If you think you might live to 90 then you will need 30years worth of money.

I forgot to mention that over your anticipated 30 years, it would be OK to gradually run the capital down, so you could use that. The trick would be to carefully arrange to die the day it hit zero! Not funny if you aim to live to be 90 and actually live to be 100!

It is multi factorial and the main issue is what standard of living do you want and what do you want to use all that time for? it will be so variable for people. I have retired early, if DH workplace offer redundancies again once he hits 55, he will be applying.

Our pension pots are decent. We are not baby boomers but are older Gen X and must have managed to get on one of the last defined benefits pensions available.

I have met pensioners through voluntary work that are really living in dire circumstances. Amongst my own friends we are all better off pensioners or they will be when they retire, most of us are aged 50 to 60.

I don’t know what your current life is like but I would work out your finances to make sure you can maintain it or at least be close to it.

I enjoy doing voluntary work in a charity shop, I’m also applying to fundraise for a local charity, I have experience in fundraising and grant applications and asking for money as have more front than Brighton to quote my Mother :) Have tried stuff like art classes, yoga, ballroom dancing and a writing group. I’m in two hiking groups and involved with a gardening project and forest school. Tried a knit and natter group but it was utterly dire unfortunately and the writing group and ballroom dancing stopped due to covid.

I'm 59 with a 14yo ds and £26k owing on the mortgage. I have 40 years NI paid so my state pension is secured.

I need £30k net per year for the next four years, then I can sell & downsize. Move further away from London.

I think I need £400k to buy an endowment to top up income for life.