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.

If you live in or near a city they are usually lots of free or very cheap things to do during the day. If you are in a rural area there is lots of free walking. I have always socialised a lot, and always very cheaply. But I am working and I see loads of cheap or free things during the day when I am working.

I think some people don't seem to value activities unless they are expensive

£3k on Xmas? I begrudgingly pay around £200 on it, apart from one year when I managed to avoid it completely 😂

To buy an annuity that gives you £1800 a month for life, you need a pension pot of about £350,000. The average pension pot in the UK 9n retirement is £138k. So yes your pension pot is significantly more than most people's.

I was thinking the pension pot would be closer to 700k.

I wonder what constitutes a massive pension to people? I guess it's all relative. I've been paying into mine since my early 20s and I'll be comfortable, but not rich.

I'd love to know this aswell. I reckon it's probably 2/3rd final salary or more, which is not at all what I have, even though according to pps mine is massive!

I have been paying into my pension since 22 and have less than you. You obviously had a very good wage.
Well off people are often out of touch financially I find.
The average UK annual private pension is about £10,500 a year. And that average includes final salary pensions.

@Constantrunneri didn't say what I've got.

You said it was just above national minimum wage

That was someone else, not me.

As you can probably tell from my username, I am deep in retirement financial planning! What I have discovered about the retirement living standards is that they have been derived from what questionnaire respondents thought they would need rather than what they actually spent. I agree they seem very inflated

My pension is a defined benefit teachers pension. I've paid into it since 1996, for 29 years. I worked fulltime until the last year when I dropped a day.

I retired aged 56 and 6 months. I'm lucky in that my pension is paid for life and will increase with inflation. After a cancer diagnosis 5 years ago I just couldn't carry on working anymore.

When I do the retirement calculators they always give me a big warning that I will have less income than now...

But when I am retired I won't have my biggest expenses: mortgage, childcare, dependent children and my big family car with associated commute.

I will be completely fine.

Not necessarily. There's the £5k extra personal savings allowance which takes your tax-free income up to around £19k if you have the "right" mix of income types, i.e. if mostly interest and dividends rather than wages. Doesn't have to be in ISAs. There's also £3k tax free capital gains tax allowance if you make a profit on investments that you sell, so potentially a total "income" of around £22k p.a. and no income tax if it's wholly or mostly dervived from investments. Gains, interest/dividend from ISAs is on top of that!

Yes, but people with relatively low occupational pensions will probably have been relatively low earners. A £10k private pension plus a £12.5k state pension totals £22.5k which isn't that far short of minimum wage for full time work. Lots of people with relatively small occupational pensions would have been part time for at least some of their working life, if not most of it, plus periods of not working during maternity leave and caring etc. People can't expect to have a higher income in retirement compared to their average wages over their working lives.

It's often with health issues that problems come, according to my older neighbours-transport to hospital, treatments, things you need often aren't available free. And several have ended up in hospital due to struggling with costs of food/heating etc, and it can be a vicious cycle, purely to luck (it's all very well saying stay fir and active, but with the best will in the world, it doesn't always happen.I hope that you keep well, OP, and it's great for you and your son to live together-benefits you both.

DH and I have about 4k per month in pensions income, plus a hefty savings pot from selling our house, We bought a nice camper and half of the remainder was split between two adult children. The other half is invested to add to our income. There is enough to buy a small house should we wish. We moved in with our single son, meant to be temporary but 3 years on he insists we don’t need to buy another property or move. Retained house money will go on home care should we need it he says. We pay most domestic bills plus food bill, the latter only when we are home. We camper travel 6 months of the year spending 10k to 15k a year. We tend to still be able to save out of income. We had an expensive extended holiday to New Zealand in 2023, from savings and will go to Japan in 2027. We lack for nothing and I think the Op is correct, retirement is not as expensive as you might think it is going to be. So if you are able to go for early retirement you should. Don’t be afraid. You can’t buy time. We have had a wonderful 10 years retirement so far and relish not working every single day.

@Reproician I really appreciate this too thank you

There is an awful lot of crap in the media which used to bother me when I was younger

I haven’t worked for awhile and I’m not actually sure if I want to go back or if I can afford to not go back or if I would even get work now.

But I totally agree it’s a lot cheaper. The amount of money that gets spent just because you’re working long hours!

i’m not fussed about travel. I think that’s probably the biggest luxury that’s been mentioned on here. Could Spend a fortune on the garden but not going to!

What a load of smug showing off.

We have had a wonderful 10 years retirement so far and relish not working every single day
Woop do do.

We are 70, one in a physical job the other still grafting.

Appreciate what you're saying. Do you mond if I ask what age group you're in?

You know you could always not click on the thread if you don't like the subject matter.

@Campervanadventures i hope you appreciate that you’re in an extremely privilege position.
Many people don’t have £4K a month floating around, even when working.
And aren’t living ‘with their son’ - much lower cost than running your own house. Or have the savings to buy a camper van etc….

And you’re healthy. Which makes many things much easier and cheaper (like travelling).

So the whole ‘oh yes living as a retired person is sooooo cheap! Look at what we’re doing’ is tine death imo.

why the snarky answer?
At 70yo you’d think people would be retired right?
But @bafta16 cant afford to. Her experience is just as valid.
Unless it touches a sore spot/fear?

This is super interesting as I might be in a similar position (not taken the plunge yet).

Do you mind me asking how old you were when you retired?