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.

Was responding to the 'woop de do' - is that not snarky?

Wow. You did well £2k per month and a massive lump sum. I'm not very pension savvy but that sounds amazing.

What job did you do if you don't mind me asking?

Behave yourself

i think working can be very expensive - I now longer buy nice clothes for the office, I don’t buy my lunch each day and have fewer coffees etc out - and of course no commute costs. The latter is a big saving as it was £10 for car park and £28.40 return a day.

I have definitely found it easier to spend less now I work part time from home.

I’ve certainly found my confidence has lowered as I’ve aged and I can’t really be bothered with the hassle of flying anymore, especially long flights. DH and I would easily do three overseas trips a year, Australia, china, Canada etc, but now I’m looking more at just holidaying in the uk.

Agree that not commuting, not buying work clothes and shoes and eating day to day at home is a significant reduction in spending. We also got rid of my car so we’re only paying for one now.

I used what I learned in my 20s working in finance to plan a future for us. Back then, in the US, I was an analyst/writer working on pensions for the teaching and education professions at a huge not-for-profit foundation. It wasn't anything I had a burning lust for, but the more I read about how easy it was to treat innocents badly, the more determined I was to ensure that I wasn't going to be the person ripped off and left high and dry in my dotage.

The USA has actually nailed pension savings: google 401K plans. Any American with a brain cell and an eye for their retirement has one. I cannot believe that the idea has not been borrowed all over the world.

BUT, you have to persuade people to put the money in at the beginning.

In my case, my DH had multiple close relatives who were persuaded to invest in plausible schemes, who were ripped off for everything. He refuses to consider any investment that is not cash based as a result.

Why did you retire at 57 if you don’t mind me asking?

@Reproician OP, do you want to provide a breakdown of monthly or annual spending? It is useful to see how people budget and live decent lives on modest sums of money.

We retired last year at 66 and are very comfortable. In excellent health and aware that could change any time.
We have done lots this year...away at least once a month, we eat out weekly and enjoy gigs/ theatre.
Couldn't do that if we were immobile or ill which is why we are doing as much as we can now.
Run 2 cars but mine is 18. Costs bugger all to run.

There are various financial products that aim to grow capital and also pay dividends. Vanguard have an All World dividend etf that's invested in 2600 dividend paying companies - VHYL.

There are also famous investment trusts, such as City Investment Trust (CTY) that invest for dividends and they hold a cash reserve to help smooth out their cash flow and maintain dividends during recessions. I think CTY has increased its dividend every year since the Second World War.

Real Estate Investment Trusts also have a high yield, but there are rules regarding them not retaining / reinvesting capital, so I think they tend to have lower capital growth, but higher yield.

You'll need to do a bit of research, but there are plenty of options.

Yeah, you can go on holiday off season (I was a teacher and always paid top dollar) and go to matinees and other things that are cheaper. I work when I want and do my work how I want to. It is worth evaluating and making leap if you can.

I am a loooooong way off retirement but I suspect I’d be similar. My biggest expenditure is convenience - I am so busy all of the time that I crash and burn and end up waiting convenience foods, buying new things because I don’t have time to tip the house upside down looking and then all the different clothes for all the different things I do.

When I have more time I will be a lot more organised and subsequently spend less.

Your monthly income is the equivalent take home from a salary of around £42k, which is above the UK average. You have no dependents or a mortgage. Most people would find that comfortable because you are better off than the majority of people!

It's not. You misread how much she's living off. Around 19k net.

I gave up my full time job 5 years ago next month and my plan was to live on my savings and I have a small passive income - much the same as your investment income. I had 13 years until SPA

i have not touched my savings.

i had a summer job for 2 months 2 summers, i host sometimes - which paid for a new bathroom and a new to me car

im not doing anything at the moment, but trying to work out how to spend some savings - which im planning to do some bigger holidays

if i run out of money, ill have to go back to work - but I’ve had the “better” years in my 50s doing the stuff i want to do

I don’t really get your relief or surprise. You have as much as an average salary and no rent or mortgage to pay. Of course you are fine.

An average gross salary is £37-39k so net around £30-32k

OP has an income of £19k net

I really can't imagine retirement at all. A single parent, 2 teens,
It's very far away for me, I'm 55. Certainly would not retire in UK.
A friends just moved to Greece at 65. So cheap there...

I think as it's only been 2 years and OP has admitted not even knowing what her monthly bills are, or having a budget, then it's too early to say retirement is cheaper than you think.

How would that come to 6 figures?!

I can totally understand this and I'm hoping to take my pension at 57 and maybe do a very part-time pocket money job.

I've been WFH since Covid and managed to save a ridiculous amount of money on lunches, clothes, matching bags, shoes, petrol etc. Just recently went down to one car etc. I had no idea that I spent so much on just getting myself through the working day. I now tend to only buy clothes twice a year to replace summer tops and winter jumpers.

You can definitely live on less than you think if you like the simpler things in life and don't keep up with the Jones'.

What’s the difference between a 401k and a pension pot in the UK?

Agree. We are not wealthy but: We are both retired, joint net pension income each month about £3.3k. We save £2k most months against holidays, 'mum and dad' loans, etc. Mortgage paid, children left home, cars paid for, and we don't have expensive tastes. I feel for youngsters with children trying to pay mortgages or trying to get on the property ladder.

I spend about a fiver a week on work related food and transport and can wear what I like. I typically go for one coffee a week and one meal out a month. That's probably quite standard.

Basically you spent loads when you were working and you still spend quite a lot now you're retired? That's not a life hack.

But most people have rent or mortgage plus commuting costs. By the time you subtract that OP is on an average wage.