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.

When you've worked for 43 years, come back with your bitterness.

Speak to an independent financial advisor. We have only used IFAs 3 times in our lives and each time they were amazing.

Investment "income" is a combination of returning some of your own taxed capital and some of the growth. The growth is tax free in share ISAs. Obviously there's no tax due on spending your own capital.
The name income is a bit misleading here.

Another option is leaving the stressful career and doing something more enjoyable that still pays a little. I've got friends who went from working in the police to working in a coffee shop, another friend took a change of direction from medicine and is now training as a vicar.

Isn't being a Vicar very demanding?

Excellent thread @Reproician. A very cheering read for a Thursday afternoon!

Also wishing to add that I agree with @Crikeyalmighty that anyone who can afford to do should make additional top up contributions to the NHS once they are no longer paying NI.

As we are about to retire (at 70!) and relocate after almost 40 years with the same practice and hospital, a top priority will be to sign on with a private GP surgery. It's the only way we can exert some control over the care we may need, see a small team, and fast-track DH (complicated history) to get him in front of the right specialists. He's been fortunate to have had outstandingly good care from a hospital that doesn't have a stellar reputation, but there's no avoiding the reality that we shall be completely at sea when we do move.

What is your part time job? I’m looking to top up my pension. TIA

@BG2015 Do it! - Tomorrow is never promised! I was made redundant, so took early retirement 3 years ago age 58. £40k lump sum which I used to pay off my mortgage and have a new boiler fitted. I had 0 savings but I do have £10k left from my lump sum which is my emergency pot.
My pension is less than £11k pa but I don’t drive and have no debt. I live alone, the bills are paid and I can afford to heat and eat.
I have the free time to care for my grandson as and when and I don’t have to get up in the dark, come home in the dark or walk daily through the town centre which gets rougher every year.
when I finally get my State Pension in 7 years time, I will feel like I’ve won the lottery.
I have a lovely life and I wouldn’t go back to work if you paid me.

45K is ridiculous. People bring up families on that.

It’s great to hear a positive story. I do think you’re right, when earning good money there is the temptation for treats and money gets frittered away. Enjoy your retirement.

Yes, don't upsize to a larger house with a bigger mortgage . . .

My dd worked from home during covid and saved enough for a flat deposit, she did have some already and had one of those accounts where you put in a certain amount and get some sort of bonus. But she saved at least £60 a fortnight on bus fares plus coffees and lunches and takeaways because she was too late and shattered for cooking and not a fan of reheated dinners. Without covid it would have taken her at least a year longer.

You're kinder than me. I do begrudge, just a little... (And yes I know that's unfair)
I'm quite worried about retirement. I'll have the state pension plus a small occupational pension (£600 or so). No savings as I'll need every penny to pay off my mortgage when I retire.
My fall back option if I really need it is a lodger.

It probably depends on the congregation but yes, definitely I think the pastors at my previous church had a lot to deal with.

Could you downsize or move to a cheaper area?

I get you and understand your anxiety. I have to not worry or I’d go mad.
I’ve got a London house so better off than many with my educational and work history. It would mean moving away but it’s still a safety net.

Do you still pay into your pensions?

I’m part of an early retired couple, we made 42k on our investments last year. We were net contributors for decades, around 40% of households are net contributors. We have almost always made money on our investments.

People will be delighted to read we pay tax on our work pensions. State pensions are a few years off. DH will then fall in to the realms of higher rate tax. A millions pensioners currently pay higher rate tax.

I've spent a ridiculous amount on dental bills this year. DH has taken to using the price of a tooth as a measuring unit, "that's two teeth ".
I have an NHS dentist but they won't do more than the bare minimum. Had to see an endodontist for a replacement root canal (£900). A new crown £750.
Also I have various health conditions and ended up with three NHS referrals this year. The waiting time for initial appointment in one speciality, before any tests is ten months. I've spent £2000 on private consultations and tests.

Another here who just cannot believe how little I need in retirement. I don't know what all those financial gurus are basing their "required income for a comfortable retirement" on!

I am going to be controversial here and say the main reason I am so comfortable financially is I am single and have no kids. Only me. That makes a huge difference I'd imagine in people's retirement income planning somehow.

I have no mortgage, house paid for. Did all the upgrades the year before the retirement package came through. I retired at 56 BTW with a package that gave me added years and a lump sum. I never worked again after that. Too burnt out and I'd worked during school hols and Saturdays since I was 15, paid my debt to society I reckon. I didn't need the extra income either so it was not necessary.

I budget well I think. Each month a chunk goes in the current account for all the bills/fuel/food, I know what I need to transfer to it and add extra every month to cover Christmas and Birthdays and so on - a slush fund!. Everything else is "fun money" really. I have PHI, and that's the last thing that's going if things get tough, I just couldn't do without it now, as I have some ongoing issues that would have me on a waiting list for years on NHS. I am lucky to afford that.

I do put a bit away for holidays, although I've done all the major travelling I want at this stage and just want a week here and there in interesting places now. Airports are the most stress inducing places on the planet anyway! I socialise at least once a week for lunch or dinner, that's more than enough for me thanks... I like Coffee meets also, which are lovely in the mornings.

I don't have a mahoosive pension but it is a good bit better than minimum wage of a full time worker for sure. And State Pension is on the way too....

I am very lucky.

Medical and dental care are two of the big unknowns in retirement, which makes them scary. The third, of course, is residential care. Hence the financial services industry wants to scare the heck out of us all.

Doesn't surprise me. I saved money during COVID doing all home cooking and going long walks. My retired friend has joined university of the third age and does loads of very cheap activities.

You do have a massive pension.

The main thing we did was to live in a cheap part of the UK and we didn't up size after we bought a house that was big enough. We could have afforded a bigger mortgage but didn't.
Otherwise we never did lifestyle inflation, a pay rise went into savings. Never drove a fancy car, just an adequate one.

What is massive to you? I suppose it will be very good when SP kicks in in a few years. I'm not complaining. But I don't think a bit above NMW is massive. Generous in comparison to State pension only yes, I agree.