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.

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
True but this is very much how it’s supposed to be though isn’t it.

Life is generally much more expensive in the earlier years - saving for a first car, a deposit for a first house, having a whole house worth of furniture to acquire, then young children to raise and pensions to save for.

It’s why comparing salaries makes so little sense - 20k or 50k or 100k a year as a 30 something with huge expenditure and a lifetime to save for is not the same as 20/50/100k as a retiree in the same way as salaries in high cost of living areas are not comparable to salaries is low.

More like £1600 per month

Sounds like a fabulous pension!

I hope it is, you know how these projections are, you never know if they are just pie in the sky. I’m hoping it feels fabulous when I get there. I may have two Sen kids grown up and still with me. Some days I’m unsure I will make it I’m so bloody tired.

She's not claiming the state pension. Her income is private pensions and ISA investment income.

If I retired tomorrow I could guarantee I’d save so much on food because I’d have time to cook from scratch! I’d probably halve the food budget for the week without even blinking. Everything has to be bought with time/convenience in mind. Not only the products but where they are bought from too. With more time I’d be able to shop around.

@Reproician I was like you when I first retired. Agree completely about the clothes, for example.

But, the thing is, you are relatively young (if you retired early). I have found as I get older I increasingly have to pay someone to do things I used to do myself - particularly gardening (it hurts me so much to kneel!), but also decorating, minor repairs, etc.

I'm very pleased you're doing so well, OP. It sounds like a lot of very sensible decisions for retirement over the years, and you're reaping the best rewards now.

I agree, health matters hugely when it comes to getting a good life of working constantly too. My health declined badly in my mid 30s a decade ago after a horrible head injury and post concussion syndrome before being injured permanently by an off label antipsychotic that gave me a neurological involuntary movement disorder 😢

Sadly, I'm a bit of a spender and my mental health has been pretty bad since my TBI. I've spent quite frivolously over the years as an emotional response to my health, and I've got a pittance of a part time job now, and my pension is dreadfully meagre. I also took some time off as a career break to look after my youngest children, so that didn't help.

Enjoy your retirement, OP. It sounds great and well deserved. ✨️🏆

While I'm glad that paid dividends for you now, it sounds like an incredibly joyless way to live. Merry Christmas, my love, here's a pair of trousers. 😂

i was thinking the other day that we wouldn’t need anywhere near as much money as we spend now in retirement. We are planning to downsize; so no mortgage (save £1k a month) and lower council tax / utilities (save £250 a month), no cleaners needed (£160 a month), no dog walker (£300 a month) no takeaways etc (£100 a month) no life insurance (£50 a month) and our son won’t need childcare or various clubs / tuition (£400 a minth) so at least £2 k a month less In spends

I'm no expert, but it's time in the market & tax efficiency. Also what are your savings rates vs mortgage rates.

Do you both have employer pensions? What are your tax rates?

We also bank / invest what we like to call 'free money'. We both have all the supermarket loyalty cards etc and play them off against/ between each other. All the vouchers earned are banked. Likewise we use our employee discount schemes to get discounted giftcards for everything - we bank those discounts too. Plus cashback - all that is approx £100 per month!

Also stooze money from 0% credit cards - currently earns us circa £150 in interest per month. So that is £250 pm to invest, in pensions you will get the tax back on that as well. All of a sudden that's £312.50 pm or £3750 pa to invest & compound. And that's just the free money

Yeah bc i had unscheduled free time yesterday, I made a yummy dinner out if stuff in the freezer mainly.

Most times I end up doing ready meals bc thats all I have the energy for.

I did wonder if there was a subtext here.

That's a lot of money. I don't earn that now, plus pay a mortgage, pay into pension, still have student loans etc - and I have a car, go on holidays, have a nice life. I can't imagine how loaded I'd feel if I earned 45k and didn't have a mortgage and my pension and student loans coming out each month.

Yep. It varies hugely, of course. My last few years at work, I was earning quite well - top 5% so not rich, but definitely had plenty of spare. Or I should have!

In fact, I spent small fortunes all the time because I was unhappy and stressed. Lots of taxis, coffee & danish every morning, lunch out, drinks and more drinks, beauty treatments and an expensive gym to stave off the effects, dinner at really nice restaurants just for the comfort, clothes & shoes 'because I'm worth it', weekend away at least once a month. M&S ready meals at home and too much good wine to go with them.

Looking back, I saw what I was doing but couldn't see a way out. So congrats to OP and PPs who had more sense than me and made it work! Glad you're enjoying your extended pre-retirement holiday, and long may it last 😎

The problem with this concept of levelling the playing field via IHT is that many people are motivated by a desire to give their children more than they had. (We can argue over whether that’s sensible in itself but that’s another issue.) Taking 40pc of their earned capital would reduce the incentive to work, build a successful business and employ people, ie it would operate to discourage the exact behaviours every western economy seeks to encourage.

Who knew spying came with such a good pension provision 😁

Then you’re fucked.

You need to factor that in for the rest of your life. Put money in investments if possible to help cover that cost, or save to buy a small place in the future (if realistic). This issue will be a massive problem for younger generations who are priced out of the housing market or paying mortgages well into retirement.

Anyone who has had a decent job and retiring around now should be doing rather well as they’ve likely benefited from modest mortgages and housing prices (of course this is a generalization: ill health, divorce, unemployment can screw that all up).

Why wouldn’t you need life insurance?

People keep saying they live on less than £45K now and can't imagine having that much in retirement but 'comfortable' in these discussions actually mean 'rich' to most people. I have ex colleagues who have retired on final salary pensions who have similar or higher retirement incomes. They drive nice cars, have multiple trips abroad every year (I'd say a holiday every couple of months), their houses are beautifully maintained, they eat at Michelin starred restaurants, go to the theatre regularly, have lots of expensive hobbies, help out their children financially. Similar to their lifestyle when they were working (but with longer and more frequent holidays because they have more time). And when you are in that bracket of society you are likely to enjoy good health well into retirement so will continue that lifestyle for longer. My MIL died recently aged 90, she had multiple trips abroad all her life, her last one was just 6 months before she died. If you are on a 6 figure sum before retirement then the idea of living on £45K in retirement feels like a massive drop.

People typically have life insurance to pay off their mortgage and provide an income for their dependents. The only reason for having life insurance in retirement is to pay off your IHT bill so your heirs get all your assets.

What about your funeral costs? We’re both retired and have life insurance. No mortgage to pay off. Very unlikely there will be inheritance tax. House is worth about £300k.

We have paid for our direct cremations already. No wasting money on a funeral

The funeral isn’t really for those who have died, it’s for those left behind.