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.

We see this crap in the media about how much you need to retire and it doesn't seem to match up with what I see in my family. And now it's me. DH died three months ago. I'm 63, not working and no private pension as I was his carer, and I get a chunk of his military pension plus bereavement support payments. These more than cover my bills, including two dogs and a car. When I get my state pension in three and a bit years, I'll have a pre-tax income of c£25k at todays rates. I won't be changing my lifestyle radically so feel I'll be comfortable.

DH took early retirement two years ago, his pension is £2,100pm. I stopped work a year ago, and haven't touched mine yet. Day to day, we easily live off this amount. We have 4-5 mini breaks a year, I'll have had coffee out 4x this week, DH with me today. He's doing an art class tomorrow and does gym, I do 3x exercise classes a week. Tomorrow afternoon we're meeting friends in pub.

We did recently take out £9k towards a new car and a more special break for our 30th. We got the house together before this, only thing that will cost is a new boiler in next ten years. We're not worried about these amounts - after I start taking my pension and then our old age pensions, the sums will easily be replaced in our savings, as well have a massive excess pa.

DH previously on an average wage and I've worked part-time for last 25 years.

Yes, I always thought that was high, I don't know what "they" spend it on.

I think I have a very comfortable life.

Why on earth would you need that much people earn a lot less than that working full time.

I agree. I think the assumption is that retired people will be going on expensive holiday multiple times a year, eating out all the time, buying a new car every few years etc etc. which is crazy because most people don't live like that.

I'm not particularly frugal. I've been on 3 foreign trips and multiple weekends away this year, and I run two cars because one is a throughly impractical sporty little thing 🤣

I have ben surprised how little you "need", especially as PPs have said with all the stuff about what you need for a comfortable retirement.

I suspect a lot of that comes from people with a vested interest in making people worried enough to buy their products/advice.

Both of us lived on less than £45k, paying mortgage and DD at uni in an expensive city six hour train journey away. Really not sure why one person needs that much.

This is nice to hear. Unfortunately I’m mid/late 30s, small kids and just upsized to a massive mortgage so have a long way ahead of me yet.

I’d love to know what you did during your working years to ensure you could enjoy your retirement?

We earn well but don’t have great pensions and savings are tiny, huge expenses with house/kids but working to “catch up”. I wonder if you have any tips on how to get set up for retirement?

@Iloveeverycat @Additup & @Reproician Quite!

I'll take it with a pinch of salt, suppose it's the fear of the unknown.

I'm hopeful that knowing my plans and creating a budget will go some way to assuage that.

I am guessing the 45 k includes rent - so around 2k a month after rent and tax for all bills and savings towards house repairs and new cars

45 k between 2 is less than 2 min wage jobs and people in min wage jobs don’t normally claim to feel “comfortable “ it’s usually simple life or hand to mouth

OP are you living off £19K or £36K? As I'm a bit confused and you've agreed to both in different post replies.

https://www.retirementlivingstandards.org.uk/

This was where my numbers came from, £45,400 is for a comfortable retirement. There are other options and it is the highest but it sounds most likely the OPs current life.

There is further information for those that are interested too.

I've always been a saver. Some of the deposit for my first house came from savings I'd built up from birthday and Christmas money in my childhood! It always went in to Post Office Savings Certificates.

When I started work I always had a standing order set up for savings on payday. Pay yourself first, not what you can afford at the end of the month. Later that became a S&S ISA.

When I was promoted over the years, I increased regular savings, not automatically increasing lifestyle, although that did happen too, I haven't been scrimping all my life.

Apart from a mortgage I've never borrowed anything. If I can't pay for it I can't have it, which means you are never stuck in a cycle of monthly payments.

And I've been lucky. Good mental and physical health and supportive family background means I've had opportunities to take and always been in work. Never in high paid jobs by MN standards and I started at the bottom and worked up, but I always progressed every few years. No career break for DC which I think was absolutely crucial, especially now I'm on my own.

This is cheering!

DH and I are planning to retire next year (I'll be 60) and we've had a full pensions plan put together by our IFA, which says we can afford to bridge the gap until the state pension kicks in at 67. But I'm slightly panicking about it....all the "what if" scenarios jumping into my head. It's true I definitely remember my spending just plummeting when I went on maternity leave, when I no longer spent money on a work wardrobe, lunches out, petrol for commuting etc. We are fairly frugal, but I would hate the thought of not being able to afford to replace the car post-retirement, or go out for dinner without fretting about the cost.

The only fly in the ointment is that our retirement plan assumes we have downsized our house and paid off the mortgage, but no-one seems to want to buy our house right now. So we might need a Plan B that covers an additional £18k housing costs per year....yikes. Might need to rob a bank.

Many live well on less than that. I ‘m surprised at how much experts think you need per year. Unless you’re continually going on luxury holidays 19 k is more than fine.

I retired 3 years ago and have a stocks and shares ISa and my very small pension, I pull £1000 a month from it and a £30000 lump sum to buy a new car. My savings earn great interest and even with this unstable economy are increasing every month so it’s not even going down with my withdrawal.
No mortgage kids all left home and my husband works part time with an income of £2000 a month we go on 2 cheap AI holidays off season and one long haul a year. Life is so much cheaper once retirement kicks in as your not constantly rewarding yourself for working.

Sorry I'm confused, you've only spent £6k in 2 years? Or have I read that wrong.

I'm also retiring very soon. Current salary 70k but plan to live off 2k a month (with extra for holidays), so interested in your monthly spending.

Edited to add: ahh I get it now. The 6k is what you've taken from savings.

What about your bills? Do you split them with DC?

The holidays you are looking for bargains. I would be fine on the amount you mention. Some people want to spend 100s on clothes or eating out without considering it. 300 on gym membership. Holidays at 5k. I don’t do any of that so it would suit me. To others, this is limiting.

That’s not a very small pension!

You have to be careful who's paying for the advice you take.

"Pensions UK (formerly known as the Pensions and Lifetime Savings Association or PLSA) is funded primarily through annual membership subscription fees paid by the organizations and companies that belong to the trade association."

It's members are the pension funds. That's not to say the advice is wrong, but it will be influenced by wanting to keep it's members happy and thereby retain it's funding.

Not quite sure how you are managing to live on £19k a year (£4k earnings, £12k investment income, £3k half your overall savings spend) and run 2 cars and go on holidays etc.

I am frugal, but dental bills, new glasses, new laptop. car repairs cut a swathe through my budget.

He me £60 pw towards food and the expensive Broadband he wants for his gaming set up.

I never earned £45k a year in the first place!

I too have taken early retirement fairly recently and am currently waiting for pension to kick in. I spend far less now than I ever used to when I was working, especially on petrol and impulse buys. We tend to keep a fairly close eye on the food budget as well, but since we've never been particularly flush we are well used to being inventive with economical ingredients.

Atm I don't have a pension, but I budgeted for £20k pa in addition to my "income" and so far I've spent £6k from a £40k budget

I'm confused by this. Are you saying your net income is 20k pa and you have 40k in savings?

Or are you saying that your net annual income is 40k?

How much is your net "income" pa?

I agree with OP. Once you stop working, assuming you've paid off your mortgage, you're no longer paying a shed load in commuting, work clothes, workplace pension deductions, life insurance, mortgage itself, etc.

We currently live off £12k each from our private pensions which will run out by the time we reach state retirement age so the £12k state pension each will replace and we'll just carry on fine. £24k p.a. for a couple is absolutely fine to live on. We have holidays, eat out occasionally, etc

The pension industry is biased and has a vested interest in providing scary statistics as to how you need £40/£50k to live in retirement. Unless you're spending £100k prior to retirement, including mortgage etc., then you won't need anywhere near that amount.

When you're not shackled by school holidays and other workplace restrictions on taking holiday time, you're free to take last minute/short notice deals which can be a fraction of the cost of term time/long forward booking holidays. It's pure freedom to have the ability to book a last minute cheap holiday on Thursday and fly on Friday!