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.

Absolutely.
As an example I don’t need to buy work clothes or shoes. I now live mostly in casual clothes which I can replace from Sales stock.
Also I have the time to shop for nice food ingredients and good delicious healthy meals.
And as the years have passed, the kids are off the books, my mortgage is paid off, holidays can be taken at cheap times…

I retired 10 years ago, after death of DP and redundancy. I was lucky to be able to buy a small house out-right, so my only out-goings are the usual (council tax, gas, leccy etc), around £600 per month. I'm living comfortably on £22k per annum, so am left with £2k per month after tax. I will get my state pension in 6 months time.
I run a cheap car (cost £250) that is over 30 years old, but my mileage is under 3000 per year.
I live alone and go on a 'weekend break (mid-week as it's cheaper) once a year.

Things have gone up in that time, particularly heating and food/household, but I certainly don't go without and meet friends at least twice a week in a quiet local pub.
I think the figures often quoted for a 'comfortable' retirement and a load of codswallop, all they do is add unnecessary anxiety to people planning their own retirement.

P.S. Getting free prescriptions at 60 and giving up smoking saved me a couple of hundred pounds per month!

Same here, calculations say for a 'moderate' retirement you need £32.5k as a single person or £45.5k for a couple - AFTER you have paid your mortgage! Seems crazy figures to me, and I hope they are untrue!

Ok, so that's what I thought. If someone was going to take this out of their pension, they would need to draw the gross amount of 22k and add on inflation each year.

I think the area you live in makes a difference as you can use public transport fairly cheaply where you live. Outside of cities, people need to drive to airports and pay for parking, or get cross country trains which are more expensive so I would adjust that slightly for the area you live in but in general, it sounds like an average single person with no additional needs could potentially get by with a gross annual drawdown of about 25k.

I think also as you get older you stop caring about the appearances thing. So for example I used to go to quite a few fancy dinners as part of my work and would "need" lots of nice dresses.

I still like a good restaurant occasionally and have a few parties to go to over Christmas, but I'll wear something I already own, not because I'm being frugal particularly but because I don't care enough to bother about it.

My day today look is very casual because my life is based around exercise and outdoor activities. That stuff rarely needs replacing.

We're just living on DH's pension of just over £2k. Will have far in excess of what we need when my mini pension and old age pensions kick in.

Admittedly no mortgage, have always run one car so that's what we're used to. We regularly have breaks away - admittedly nothing extravagant - a winter log cabin we get a good discount on, Devon, camping, Amsterdam and maybe a New Forest break soon. Spend far too much on coffee, drinks and eating out, oh and drink more wine now as we're on a constant weekend. Both have hobbies that we pay for (as well as cheaper one's we can do at home).

We've never earnt £45k between us, so don't get where those calculations come from.

my friend sold his car and just Ubers everywhere now. He saves a fortune apparently.

After reading how much some have to retire on let’s hope no one in the Government reads this thread and realises this dispels the myth about poor pensioners!

I retired for the 4th time in April. After 51 years of work. I kept going back.
But finally settled and feel grateful for everything I have.
We lived a very consumer life when we both worked but now the old fella and I have state pensions but put 40k away over our lives.
Paid the house off years ago, drive a tiny car and live simply. I would not go back to the spending life for anything.
That 40k is to help with things we might need to make life easier as we get older....a cleaner perhaps, being able to call a handy man to do the jobs that he cannot do anymore.
I am grateful for our full pantry, our loving neighbours and my amazing kids.
Why did i not realise earlier that you are not defined by the car you drive, the clothes you wear....I live in jeans and charity shop tops, the house is a tiny mill workers cottage in rural Derbyshire and a treat is once a week fancy coffees after Mass and Saturday drinks at the local.
I think maybe cancer , which is gone now, put life in perspective and I'm grateful.

They are crazy figures. I don’t know who comes up with this rubbish.

Most of my retired friends live on less than £2k a month and still go away and eat out etc on that. Bills are only about £1000 with food so plenty left.

Who'd have thought that pension firms wanting to scare you into investing more into their pension schemes would come up with inflated figures as to what you need in retirement!

As a PP mentioned, the figures quoted by pension firms are more than the average earnings during working life, so are nonsense for most people.

It's just blatant scaremongering.

And whijst I am going to be very unpopular for saying this and a bit of a negative Nelly, this is why I think early retirees under 67 and not paying NI atall should pay a flat £100 a month towards health -I think we all know it’s ‘todays’ payers paying for all , not related to what people paid in to the system in the past - at the moment there are a hell of a lot of people paying zilch due to low tax if any at all and no NI . I also think anyone paying no NI but on benefits should have an £8 a week deduction too towards health as they are often getting a full credit towards pension! . In Germany state health insurance is 340 euros a month ( each) and pensioners pay in full too unless very little income or assets. If you are in employment your employer pays 50% - in Netherlands it’s 170 euros a month and all on you. Not a personal thing on you OP , just a general observation and glad it’s working out ok for you

Our history, we could only afford a small house in really nice area we wanted to be in, but meant bills/insurance lower over the years. Always overpaid on our mortgage. We only had one DC, always had two cats though. Times were very hard when DD was little for a couple of years (think cold house, DH working away and I'd go without food, so learnt how to live very fruggley and found nice cheap food choices that we still have at times). Juggled one car. Always done our own gardening, cleaning windows, decorating, simple diy. Moved to present larger house 13 years ago, again overpaid on our mortgage, inheritance of £30k helped then repay. Once mortage repaid, we could easily save more. Luckily present house rewired just before we bought, we've had new kitchen and bathroom installed in last three years, as well as a new roof as leaks all over the place. Sometime in next few years we'll have new carpets and heating will need to be updated, but as said upthread if we need to take money from savings, we'll easily repay when extra money starts to come in.

DH worked full time, I worked part-time after DD was born.

Yup, as I said upthread, we currently live on £12k per year so when state pension kicks in and we fully give up work, we'll be no worse off. That's including 2/3 holidays per year, car costs, food, clothes and utilities. We've no mortgage to pay and no child care and no pension contributions nor life insurance/health insurance etc., so we have none of the "big ticket" costs that middle aged workers face.

What made a massive difference to us was not falling for the "buy the biggest house you can afford" tripe that lots of people fell into. We bought a relatively modest home, and never moved. Our "first home" is also our "forever home". We paid off the mortgage after about 10 years and instead of doing what everyone else were doing, we didn't move to a bigger home, we just invested the money we previously paid on the mortgage. Now at the other end, we don't need to downsize as the same home is small enough for us, yet it was also big enough for our family. Therefore our utilities etc are also relatively affordable. We could afford to buy a "forever" home when we got married because we saved and saved rather than rushing into buying too soon, so we had enough savings to cover half the purchase price, hence a relatively low mortgage. Over the years we've saved tens of thousands compared to friends and family who moved several times in terms of legal fees, stamp duty, removal fees, redecoration/remodelling of multiple homes, etc.

I would not go back to the spending life for anything.

I stopped spending years and years ago. I think one day I just realised that everything we buy which is not consumable, is just landfill. When you look at the rows and rows of plastic tat on shop shelves, you just see landfill. And it's not just plastic. Literally everything will be in landfill one day. It makes you think.

So yeah, I've saved loads, paid off my mortgage and retired early. Time is worth so much more to me than objects destined for landfill. You can live off very little and still have a lovely life.

I agree about the high average incomes quoted for a decent retirement being nonsense. If you own your own house and have savings and workplace pensions you can live pretty comfortably on about half the amounts quoted. We have an income of about £50k per annum between us, as well as savings. We don't spend anywhere near all this income and save some. We're done with air travel now, too much hassle - but there are cheap deals out there in term time if you do like foreign holidays.

We retired early and had to bridge that gap until state pensions kicked in and it was fine. I kind of based our retirement on my parents version - they lived a nice life in the country, and their pension was enough for their day to day needs. Anything extra they could fund from savings. Because we moved house a few years back, we have done some improvements - but spread them out - things like new patio doors, new fitted wardrobes, and a new very high end logburner effect gas fire with new flu, hearth etc. Also we've had to buy a new car. It's not scary because we both took some lump sums from our workplace pensions so have that security of savings.

We also help our grown up kids when appropriate, and fund nice holiday days out for them, as well as things like some books, toys and clothes. Because we moved to a cheaper area so had excess equity, we also gave them a lump sum.

So don't be sucked in by those high figures for a good retirement, life is so much cheaper when you're retired. Also to add, although we still do drive, it's less hassle to use our free bus pass on public transport to our nearest city where my husband does some voluntary work.

As you get older you do realise the cliche 'life is short' is unfortunately all too true, so no regrets retiring early - husband was 57 and I was 61. I actually retired a little bit later than him actually, due to circumstances at the time.

I was fortunate in that we had a good company pension scheme. They actually closed it down to new employees many years ago. However, I was in it for over 30 years.
Something my Dad instilled in me was to start making AVC payments and to up the amount every year when I got a salary increase.
I think I started way back putting £10pm into my AVCs. The next year I got a £50pm pay rise and upped my AVCs to £30pm and so on. I got up to about £180pm and my wife went on Maternity leave so I completely stopped my AVCs to compensate on the lesser household income. When she went back to work I started paying the £180 again and upped it in subsequent years.
I know not everyone has this opportunity, but you should really try putting a little away each month and up it a bit as and when you can. It really does add up.

I don't disagree. It's madness that I'm not contributing currently.

I also don't object to inheritance tax, despite probably both my parents' and my estates having to pay it. It makes sense to me that those kinds of amounts being passed on should pay some tax.

I also haven't taken any steps to protect my assets being spent on care, which seems an outrageous thing to do to me.

I get what you're saying, but there no one cap fits all.

I've worked very much part-time for 20+ years, so not paid any NI during that time. When DD was younger, it meant we never had to claim free child care from the government as one of us could always be there for her. Up to present, I've hardly been a burdon on the NHS, DD born 25 years ago, I've seen a GP twice for pheumonia and once because they read my cervical cancer test wrong - so haven't been a GP for sixteen years.

We're obviously very lucky at the moment, but DH has actually said he'd be prepared to pay towards the cost of a GP appointment, assuming he'll need more appointments in the future, but that wouldn't be popular either.

After talking early retirement from teaching the amount of savings he on holidays was a revelation. I go on more overseas holidays now but spend less.

Sounds good especially the travel

I concur, I’m not retired yet but dh is, we are living on 15% of his former gross salary plus my pt minimum wage level job without an issue because our mortgage is paid off and we have no other debts

We never started spending frivolously. Not even when we were teens. We worked hard for our money (part time jobs alongside school/college etc) in evenings and weekends. We didn't know each other back then so it was coincidental we both did the same. Every penny spent we carefully thought about. I used to spend some wages and save some wages, religiously every week. Going to the bank every Monday lunchtime to bank, usually, at least half of my part time job wages. I limited myself to what I'd spent on the Saturday shopping trip out and for socialising/pubs/discos on Friday/Saturday evenings. It was in the era of high interest rates, so I was motivated by watching the interest get added to the account on top of the pay-ins. Me and DH didn't meet until early 20s, but we were both surprised the other did exactly the same and pretty early on, we compared our bank savings pass books (Yes, how romantic!!). It worked out well because during our courting days, neither of us felt pressured to spend money on things we didn't value, so we'd spend time feeding the ducks (obviously we bought half price out of date bread at the shop on the way!!). Neither of us had many clothes as we spent our self-determined "clothing fund" on work clothes, so we tended to buy each other clothes for birthdays and christmas rather than landfill destined nonsense gimmicks. Even on holiday, we'd pre-agree a budget, typically (in those days!), a fiver each for lunch and a tenner each for evening meal and a tenner each per day for anything else - we never even rented sunbeds on the beach, we'd just sit on our towels. You can have just as much fun on a budget and it pays dividends for the future.

Trouble with health is you don't know what's round the corner. My DH never troubled his GP for decades, but then he was diagnosed with cancer totally out of the blue. It's one of the many cancers that has no known cause/reason, so it was nothing to do with lifestyle - he never drank alcohol, never smoked, never took drugs, never overweight, always healthy and active, etc. Now he's never away from either the GP surgery or the hospital.

I'd far rather have an insurance based system like many European countries have instead of NIC (which is just another tax), so at least we'd have choices rather than the "put up and shut up" attitude of the NHS.

Could I ask what your £12k income comes from? I am looking at my savings/investments and I have a fair amount but was surprised how little 'income' it actually yields. At the moment I suppose you can get 4% on cash, but that won't last for ever and inflation erodes the value of the cash. Whereas US stocks yield only around 1% in dividend income, giving returns mainly by gains (which feels a bit more volatile to me, plus tax-wise at very low levels income is better than gains as the annual allowance is higher for income).