If you are retired and have a good life, can I ask how much pension you draw?

[User5512]

I tried some calculators and they all gave me vastly different numbers.

I’d like to know (roughly) how much money does a couple need to have a good life in retirement.

If you are retired, would you be kind enough to give me a rough idea of your lifestyle and how much pension you get?

thanks :)

I'd love to know this! I saw £41000 or something in the news today - I don't even earn that now...

The general recommendation is ‘the two thirds rule – for a comfortable retirement, your total pension needs to be about two thirds of your pre-retirement income to enjoy financial independence.’

Well I've got a decent teacher pension building up, but even with state pension added, when I reach that age, it's not going to make 2/3rds of my income!

This website breaks it down:

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

This was recommended to me today. https://www.retirementlivingstandards.org.uk/

General consensus is £50k for a comfortable life for a couple.
But I guess it all depends on what you consider comfortable?
We are on our first year of retirement so just finding our feet really and what we want to spend on holidays in particular.
Hoping £40k should do it without large purchases, such as a new car which would come from savings.
I'd be interested to see what posters say.
OP, how much do you think you'll need?

It depends on what you call a good life, we're currently living on DH pension, state plus private, we have no mortgage and our life is better than it used to be and I'm going to start my private pension in April, I don't know the details of DHs but mine will be around £100 a week plus a limp sum of around £15k

I'll have the state pension and roughly £250 a month from private pension. It'll have to do! I saw that article in the press today as well saying the minimum you need to even exist will be £14k, which I won't have. I retire in 5 years.

Most defined benefit pensions provide around half your pre retirement income if you have been in them your whole working life. It always amazes me that the suggested figures are often higher than many people earn and certainly higher than the living wage.

I look at my predictions of private pension and it is in the low catagory based on the links above but with state pension added I’d be between basic and moderate (single) when I look at the descriptors I live my life somewhere between the two now and feel I have a good life. If I can stay healthy and active then I should be ok

I think the 2/3rds rule is a bit misleading.
We save a big chunk towards our pensions and another big chunk towards mortgage. We only spend about £4K a month on other bills and living expenses (2 adults, 2 teens)

should we be aiming for 2/3 of £4K ?

It always amuses me to see what other people consider essentials for a comfortable life - I wouldn’t want to spend anywhere near as much as the report people linked to upthread recommends. For example, I don’t even spend £1500 per year on clothes and shoes now, let alone once I’m retired and won’t need work clothes!

£3k a month is enough if you have no mortgage and some savings to dip in to.

I should add it's more than enough tbh. We don't go mad eating out etc but we live well enough. I'm very aware families live on less and consider ourselves fortunate.

DH & I will get around 20k pa each before tax, mortgage paid off years ago.

I'd say we'll be pretty comfortable.

This calculator says we need 59k to be comfortable. Isn’t that nearly £100k in gross? !!

How big should a pension pot be ? 4% rule is based on draw down. I have anxiety around eating up principal amount. lol . I can only be at peace if I can live off returns. Is is reasonable to assume a 4% ROI ? So a pension pot of £2M should be my target?

I think it depends on a great many factors, but I have settled on my own rule of thumb which is to

• take our current post tax household income
• deduct mortgage, school fees, life insurances and kids savings
• add a buffer for other savings (for holidays, Christmas, house maintenance, replacement white goods etc)
• aim for that as post tax retirement income (for us that would be about £35k)
• use a reverse income calculator to work out what that means as a per-person pre tax income

We’ve gone from a joint income of £70k a year pre retirement to a joint income of £50k. When both me and DH fully retire (he still works full time, me PT) our income will be around £35k.
Currently we run 2 new cars @£600 per month lease, and save £600 per month. We live quite well. When fully retired, we will have 1 car, saving us around £5k, and reduce our savings, which will have increased by around £20k. So despite the drop in income, our standard of living will remain similar to today.

Remember you pay no ni on pension income.

we’re aiming for 50k for a couple in todays money

That report quoted today came from The Pensions and Lifetime Savings Association. I suspect they have a vested interest in wanting people to invest in a pension. It was discussed at work today where a significant proportion of the workforce don't even earn the minimum levels nevermind have any hope of having them in retirement.

If it is £59k between a couple you will not be paying 40% tax on it so the gross figure will not be £100k. Also it does not factor in the contribution from the state pension which will be £23k of that £59k.

I don't think a calculator will be able to tell you what you need to be comfortable. Two thirds of income is meaningless in my opinion, it's your spending not income that you need to consider.

I'm of the opinion that my general expenses won't drop much in retirement, I will still enjoy shopping, traveling, eating out, spoiling my kids (maybe grandkids by then). Obviously the older you get the less likely you are to be doing activities or traveling but there's plenty 80 year olds out there who do too so I'd like to have the option if I'm lucky enough to be in good health. Certainly in early retirement I'm very unlikely to suddenly drop my spending by one third. However, I will have my mortgage paid off, won't be saving into a pension and will no longer be paying for income protection and life insurance so won't need to account for those expenses.

If I was relying on my pension, then I would not have enough money for everyday expenses, let alone holidays, house maintenance, new car etc. However, I do have access to funds that I saved hard for when I was working - bought ISAs most years, bought Premium bonds, contributed to FAVCS ( like a secondary pension) and other investments. So I supplement my pension by using my investments or drawdown from my supplementary pension ( instead of taking out an annuity) and I feel very secure and am enjoying a good retirement.

Just basing your retirement on pensions is not the full picture for many people like myself, for my last 10 years of work I was earning good money as a Deputy Head in a large comprehensive, mortgage paid off, children financially independent and divorced so only myself to think about.

The fairly recent pension changes to allow draw down instead of having to have a regular income also suits me better, allowing me access to lump sums for expensive purchases instead of having to save up for them.

The value of your house might also be a consideration, especially if you no longer have a mortgage. I own a three bed bungalow in a decent area of Manchester/Cheshire borders and if my savings run out, I plan to sell it and move into a smaller 2 bed apartment releasing a lump sum for me to spend - or pay for care!

So, if I were in my 40s and looking at what my retirement might be like, I’d look at a wider picture than simply having an income from pensions.

I appreciate that I was fortunate to be able to plan ahead but I’ve always been careful with my money, had some tough times with the high interest rates on mortgages in the 1980s when we almost lost our house, and now I can enjoy my retirement.

Is that regardless of age? Even if someone retires at 55 with pension coming from workplace pension pot

I’m on my own and have 4k after tax. It’s plenty for me.