how much do you think you will need to retire on?

[SingSam]

I am spending the last few days before going back to work looking at how much I think I will need when I retire.

I have read all the advice about how much you are likely to need (a lot say 2/3 of current income which for me is not going to happen), some say work out what your bills are likely to be and go from there...

I am in London so I assume for now I will stay where I am and potentially be mortgage free (v small property). There is the potential to sell up and buy somewhere cheaper but I don't want to consider that option yet (without doing some more research).

I just make a spreadsheet of what my bills are likely to be - excluding food, excluding mortgage - and I was quite surprised by how high they are. This would be assuming I stay in London. I am also sure some bills might go up (like electricity) as I'm in the house all day but then I assume my travel costs would go down (not commuting to work, getting a bus pass eventually!).

has anyone else done this sort of exercise and thought what sort of monthly amount they are likely to need when they retire?

This thread is so interesting.

I budget £3600 pa for food currently for 3 people but spend £2400 and spend the rest on treats or clothes.

With mortgage paid off i need £600 per months for bills on top of food but thats with activities for kids and small saving and days out. So even if some costs get higher, lots of these things will no longer apply, ie my kids will be grown up so i think ill need 7 -800 pm in retirement.
So 9/10k a year.

Watch the channel 4 documentary, "How to retire at 40" it works out what proportion of your income to save for 7 or 14 years or longer and how you could retire, with or without a pension.

Using these principles, if i go fulltime in 3 years time for the next 11 years and save 60% of my income from that period.

I will retire at 55 with £250k savings and ill work adhoc and maybe part time till i get my state pension at 67. I can also downsize to release more funds.

I currently dont have a works pension but have full ni paid. Ill only have a works pension for the 12 years that ill work fulltime so that wont be much but i plan to be saving in this way and putting it into investments etc.

This is the way ive thought of for me barring ill health, as ive been a sahm and carer for 11 years now.

Even wth ill health, ill still be frugal and save as im happy with my outgoings and idont need to spend more money so when i have it , ill save it and keep my outgoings at the same level.

Disclaimer: my figures arent exact but the channel four programme explains it better than i can.

I retired a couple of years ago when DH qualified for pension credit and I had an accident which stopped me working. We manage on £480pw (£25k pa) between us, made up of pension credit, PIP and carer's allowance. We qualify for full housing benefit and council tax reduction (no top ups as the housing benefit covers the rent on our council house). Neither DH or I have ever been able to pay into a private pension as DH is disabled so mostly worked p/t, and my jobs were always low paid with no work pension. I left work aged 59 and DH was 62. I could probably do a bit of p/t work now but there is hardly any point since it would reduce our pension credit, although I've done a bit of ebay selling. DH gets his state pension later this year, but I don't qualify for a few years yet.

It's not a luxurious lifestyle but I am used to tight budgeting due to being on a low income all my life, and without travel costs to work and now getting free prescriptions/bus pass, we find it is comfortable enough to cover all bills, food, odd meals out, modest holidays, treating our dc/dgc etc. I think we probably have a slightly better lifestyle than we did when we were working, as I have more time to do things myself/shop around/use off-peak deals etc.

I have worked out I would need approx £14000 pa to live on (single with mortgage paid off.) Thats why I was surprised that a pp said she would be able to live on £5000. My council tax would be more than 20% of that.

I'm nearly 61 and OH is 63. We are planning and hoping to get by on £2000 a month, so net £24,000 pa.

We downsized 2 years ago to retire early and are busy spending my OH's 'pot' until a 10k pa work pension kicks in at 65, then we'll have to top that up (from savings) that year until age 66 when 8k state pension kicks in (so 18k a year) and top that up again to 24k (again from savings) until my state pension kicks in at 66 when in total we should have around 24k nett between us.

Savings pot will have dwindled to around 70k by then, or less if we have expensive holidays or major spend like a car, but overall we think we will be fine.

I found people sharing their plans on Moneysavingexpert (the number thread) very helpful and reassuring that our plans were doable so thanks for this thread OP.

I never plan to retire.
I plan to keep working just for fewer months each year.
Former managers at my old firm do the odd month well into their 80's
my dad finally quite his CPS / licencing at over 80.
I like what I do so see no reason to stop.

I am saving like fury to cover the other months though

It's not really about retiring though. We stopped working for an employer so we would be free to do what we want to do. Which we are doing and really enjoying it. A creative industry from our home studio for our own enjoyment and if it brings in an income that's great but not essential.

I will also work into my 70's, possibly later. I love my work and work for a great boss me ha ha That makes me very lucky though, not every job is so flexible.

The Aviva web site is brilliant, thanks don'tcallme ....

I'm hopeful that I'll be able to live on £14,000 net a year (today's prices) - £9,000 would cover bills and basics, giving me £5,000 for luxuries which seems fine. I was a late starter to savings - I had very low-paid jobs until I did a degree in my early 30s so only started saving in my mid-30s. Like others I think I'll probably work part-time rather than retire, but I'm saving as hard as I can so that I have choices when I hit my mid-60s. And in any case, things keep changing, and I might want to help my DDs, so I reckon it's best to have as much of a cushion as possible.

I was contracted out from state pension (as per the advice at the time) for some of my working life, and I don't really understand what the pensions gateway is telling me. On the first page it shows me on target to receive the full state pension, but on the next page (the contracted-out one) it tells me a weekly sum that is supposed to come from my private pension. Is that sum subtracted from what the first page tells me I'll get? I'm budgeting in the expectation that the cash pension will eventually disappear in favour of means-tested benefits and I might not get anything at all, but it would still be good to know how to interpret the website.

I think the lucky people will be the ones whose parents own a property and they inherit it. They might even inherit more than one property. I think I could live on around £1k per month on my own but with DH it will be loads more as I'm quite frugal I think and he isn't. But he would say it's the other way round.

And good point about this contracted out. People think they'll get the full state pension and they won't.

I’ve believed for a long time that there will probably be no state pension by the time I reach retirement age. Having given up work when the DC arrived, couldn’t afford childcare for twins, and then moved abroad my contributions are severely short.

We are trying to save as much as possible, DH thinks we’ll need a lot more than I do. I can’t decide which one of us has got the numbers right.

I intend to keep working 2 days a week until my 70s.

I’ve got a job where that is doable.

I like Work and don’t want to stop completely.

@morningtoncrescent62 You are right, the 1st page shows you what the full pension would be, the 2nd one tells you how much of that should be paid by your pension provider, so your state pension will be reduced by that amount.

Ifailed - you can add to your state pension if you were contracted out. I contracted out for about 5 years back in the 80's. I am now 56 and logged into the government website a couple of years ago to see what my state pension would be based on my current forecast. I still work full time and for each year I now work it will add £4.42 (Or thereabouts, sorry can't remember the exact amount) to my state pension. In 3 years I will have made enough contributions to have topped my state pension up to the maximum.

Quote taken from the Government web:-

You can get more State Pension by adding more qualifying years to your National Insurance record after 5 April 2016. You can do this until you reach the full new State Pension amount or reach State Pension age - whichever is first.
Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.56 a week to your new State Pension. The exact amount you get is calculated by dividing £159.55 by 35 and then multiplying by the number of qualifying years after 5 April 2016.

In my profession you are ancient at 50 and the first to be made redundant during restructures

What evidence do you have that your profession makes people redundant based on age as the deciding factor. That is age discrimination.

Are you sure you're not mixing up with voluntary redundancy which is an entirely different proposition, because the company will make it worth their while, such as giving an enhanced pension scheme as part of their redundancy package. People often do that, then get reemployed by the same company as a contractor.

Icequeen01 I looked into this, but was told by the advisor from DWP that it would be of no benefit to me, presumably because I opted out for so long (it was in the 80s) and already have 35 years of NI contributions. Looks like it is something that an individual needs to look into for themselves.

I’m trying to think what outgoings might be. Currently monthly bill outgoings are £850 a month, £200 of that is mortgage. So max of £650 a month but I could probably reduce as that as that includes 2x mobile phone contracts, sky tv, car insurance, caravan insurance.

I guess on top of the £650 I’d need enough for food, so that might stick it up to £850 a month. Then a bit more for clothes, any emergencies, etc. I reckon I could live off £1000 a month, especially if I had some savings/lump sum for any household emergencies, might need to be fairly frugal.

Currently have pensions worth 7k a year (defined benefit) and another 20ish years of work left to build that up, hopefully some state pension as well. So I’m getting there.

VivaLeBeaver I don't know how you get around now, but have you considered what the impact would be if your mobility was impaired? What if you couldn't drive, or walk very far? I know a couple who are practically house-bound now as they cannot afford taxis etc and are reliant on friends and family to get them out and about, both use frames to walk and the husband can't drive anymore.

ifailed. Is that right that if you’ve been contracted out you will always have some money taken out your pension? I was contracted out until recently without knowing, so about ten years in total. However by the time I retire I think I will have had enough non contracted out years for it not to be an issue.....that’s what I was led to believe by some pensions calculator a while ago. It’s very confusing.

I live next door to a Tesco express, literally next door. So am hoping I can still shuffle there in my old age. Bus station a minute walk away and train station two minutes walk away.

VivaLeBeaver I can only talk about my own experience, best thing I can advise is to ring DWP?

Thanks, will ring them next week.

OP unless you have a generous index-linked final salary pension - you will have to 'cut your coat according to your cloth' in retirement - probably no expensive cruises etc if you are single.
From my experience - I am actually a single retired female (with no generous pension) and manage to pay my council tax, insurances, utilities, run a small car and take a short holiday each year in this country, finance a dog etc on about £12,000 net pa. I also save a bit each month for unexpected expenditure (replace white goods etc)
In no way am I living 'high on the hog' but I have enough if I am careful.
My income is a combination of state pension (which I worked and paid NI for 40 years for) and a small annuity (£5k pa) from a private pension.
As you live in London - you are well placed to downsize (money wise) to a much better environment in the rest of the country. Life can only get better.