Pleasantly surprised how cheap retirement is..

[Reproician]

Two years ago I was earning £70k and living very nicely on it.

Then stuff happened and I decided to take very early retirement. I have good pensions to come in 5 years' time, but meantime have some casual work which earns £4k pa and investment income of about £12k. I planned to live off savings to fill the gap and budgeted up to £20k pa.

Now, I realise I am very fortunate and I am definitely not claiming poverty. I realise being well set up and then moving to a lower income is entirely different to a lifetime lived on a low income. My mortgage is paid off etc, but I am finding I only need to draw on the saving for one off big purchases. I've drawn £6k altogether in 2 years.

I'm still living a good life. I still spend without thinking to hard on the things I want, I still have a busy social life, I still travel multiple times a year.

Being able to be fully flexible means everything is cheaper. I can at the time of the week/month/year when flights are cheapest etc. And the money I must have been spending on clothes, food, travel for work etc. PlusbI think when you're working hard there's a tendency to spend on "treats" that you don't feel the need for when lofe is.lore relaxed.

Just me and an adult son at home. He pays some keep, but I don't make any profit out of him.

Following with interest as retirement looms…

Are you fixed costs very low? I think it's great you are managing well on £19k per year and using ISAs means you are not being taxed. I'm constantly looking at my retirement date but my fixed costs (without a mortgage) wouldn't be much lower than your income per month and then I would need to add food, hairdressing, dental, optician, subscriptions, entertainment etc

Thank you. Will check this out :)

A lot of people are fearful of not having enough money in retirement.

I think a lot of people in pensions prey on this. Obviously the more you shove into pensions the more money they make.

OTOH, at the end of the day only you know what sort of lifestyle you want when you retire and how much that is going to cost.

If you can't calculate that for yourself, you either have to be fearful, or rely on someone else's possible self interested over estimate.

For me I am not really that interested in new cars every 3 years and world cruises every 6 months and I don't keep a mansion or an army of pets. So the amount I need for my retirement is much less than I would guess the average financial advisor would recommend.

Someone once told me that it costs money to go to work and this is certainly true. The commute is a huge waste of time and money - bus fares or petrol to put in the car. Then there is the money you spend on your work wardrobe, make up, hair dressing, toiletries and so on. In retirement there is not the same pressure to keep up your appearance and you don't need a "professional" wardrobe. I cant remember the last time i wore tights or makeup.

We are always saying this as a couple.

I love to cook from scratch but have bugger all time to do it. Takeaways won't feature as much when I can cook myself!

We're always seeing holidays for a whole month that cost less than a peak time week.

Plus with travel, you have to take flights if you want a week in Greece, but you can go the slow way if you have the time.

Your point about the switch from save to spend is a good one.
I remember when we had children. My salary went right down and all went into child care plus our costs went up. I was nervous about our finances in a way I had never been before. In hindsight I was too stingy cautious.
Now in my late 60s and DH in his 70s I am getting used to spending more. We hand money on to our DC and I don't think as carefully about spending on the house or ourselves.

I am in my forties with two primary age children and constantly worried about finances. We hardly have anything to save. We can’t save separately for the children’s future yet. And DH is older than me so will be retiring a long time before I do.

it’s actually really helpful to read that we probably are saving enough and doing ok - even though the anxiety about inflation and the future of our careers is always there

People really aren't believing that you aren't some seasoned tax dodger!

I think the point that OP was making was that she goes on holiday, eats out and does activities, all pretty cheaply. She gives an example of a break to Spain ( I think it was) where she had really cheap air fare and her accommodation half of £400 (apartment with a friend).

She had a good salary when working and that enabled her to save for early retirement.

I spent a heck of a lot less in covid due to having more time to cook, not needing transport to work and no nails hair lashes etc.
I loved the more time with my little one

And the point is! ?? Alota folks would call,you smug….

There are many people out there who are forced to live on their government pension alone and then it is very tight (self employed/ low paid jobs etc.). Certainly couldn't run a car off it. So count yourself lucky. Also many future pensioners will be renting as opposed to mortgage free which bodes for a future of poverty.

You are living the life you describe on £1300 a month? How can you afford to travel and have a busy social life?

I could have written this post. I'm mortgage free and live on an annual income of £20k. Travel 2/3 times a year.

Have my youngest adult child still at home as he just graduated Uni in the summer and has only managed to get a part-time job at the moment. He contributes to the household but it barely covers his food and gas/electric usage. I don't do much socialising and rarely buy new clothes as I already have plenty. I even manage to put away around £400 per month into my savings account. I live in Scotland so do benefit from free prescriptions which I do need for some medical issues and have had my bus pass for just over 2 years now, so gave up my car as have a very good bus service.

That’s reassuring to hear. A lot of us live in fear wondering if we have enough to see us through.

“My mortgage is paid off, etc”

That’s why you’re finding it so easy, then.

Surely it depends on your idea of socialising.

Dinner parties every weekend plus theatre trips and rugby tickets is a world away from the church hall Beetle drive, book club and walking group I do (in my 40’s but imagine my social life will be quite similar in retirement!!)

Each time I’ve been on maternity leave we’ve found it much easier to manage than we expected, despite the larger drop in income. It’s much easier to spend less when you have more time.

I hope I am in a good position when I retire. I have a disability which may force me to retire early but I hope not. I have already put 30 years into my NI contributions for full state pension and I have a work pension with a projected value of £60k currently plus lump sum of £268k. I’m hoping I have enough as I don’t own any property. And to be honest I don’t really know if the projected value is accurate or even if it will be anywhere near that.

I imagine retirement is liberating because you no longer have dependents and high running expenses. You can always cut back for yourself but not for your dcs.

What about if you rent?

DM lives very comfortably on £25k and has not needed to touch savings
I will have less - hoping for £20k in pensions but will have more savings and am hoping to continue working 1 day a week which will pay an additional £12k

Forgot to say the £20k pension includes state pension
I will also be mortgage free in a property that I can downsize in the future to release more money if needed

This is why the pension triple lock needs to go