How much monthly do you plan to live off of for retirement?

[Mamabear12]

I am curious, how much money do people think is okay to live off monthly for retirement. My dh never wants to talk about this and I do not work, so don't know if I will qualify for any money for retirement. My dh makes a good salary now, but his retirement isn't great he says.

So my plan is, we live in a house that has been rented out in the past for 4,000 GBP a month. I assume in 20-25 years, it would increase or lets just say it stays the same, would that be enough to live off, if we move somewhere else that isn't so expensive (currently live in London, but would not want to live here when we retire). We would also have a big chunk of savings in case of a rainy day (lets say a couple hundred thousand, but would not want to use that for living, only for example if we need to if the house is in between being rented a few months etc..or for any extra costs that might happen).

Does that seem like an okay plan? My parents had such a good retirement plan, I feel like we are screwed in retirement as we haven't really planned and these days retirement plans just aren't the same!

I'm not a UK citizen either (but I'm from the EU) and the pension credit without taking the benefit works for me but you'd need to enquirer about your specific circumstances.
I assume that all the pension stuff would work as long as you're a legal long- term resident.
The money you save towards a pension is always there and every single penny would be inherited (i.e. Private pension and LISA). By the way, you should also make a will to specify who gets what. Depending on what amounts of money you'll have available, you could also have start an ISA - money gets invested but you don't pay tax on any profits (you can save up to 16k a year on top of the 4K going into a LISA).
There's also some other stuff but basically, you just need to sit down with a good Independent Financial Adviser to sort stuff out.

i know someone just like the OP well educated and married well,
and through a series of good luck has never had to take note of income or bills.
so starting slow and taking the learning curve easy over a longer period of time is helpful.
so again find out what the family has for income and expenses then meet with a professional annually to keep you up to date on helpful hints (such as planning a will).

JoJoSM2 , yes my dh mentioned the ISA. I will sit w a financial advisor. At the moment, any investments made towards retirement would have to be made my dh until I get back to working. I did start a retirement account when I was younger in another country, but stopped paying into it as I left the country. Its only a few thousand now. I did have retirement on my mind (this was before I started working, I had convinced my dad to start this for me)....

You don't need to work to get the LISA and the 3600 pension annually. Just pay that out of your family money.

You should insist that dh discusses pension planning with you. It is irresponsible of him not to. Whilst he is earning good money he should be paying extra into pension plan. My dh will get £24k a year for life and if he dies I will get half. I will get £7.6k a year for life and if I die he will get half for life. These are our private pensions. I will get a full state pension of £168 per week and he will get around £140 per week state pension. We also have six buy to let and so will also get a £25k per annum income from them after paying mortgages. We will have to pay tax on this income. Our own house will be fully paid for. I have already inherited from my parents hence the buy to lets. My dh will inherit half a share of his parents house and small savings, provided they do not go into a care home and have to sell their house. We have also both got good life insurance on both our lives. Even though I think we will be ok in our old age we still are careful with money and save for our retirement. We don't want to not be able to afford to things we will enjoy and do not want to stop our holidays and hobbies etc.

Surfskatefamily that is another concern, any pension plan etc, I want to make sure I am not putting away money that wouldn't be able to be used if something happens to me. I will have to discuss this with an advisor. We lost two good friends age 34 and 43 last year, which makes me think about these things. Also, my father died a few years after retirement :( so he did not live long in his retirement, he had a really good plan though and half of his retirement now goes to my mom (who also has a really good plan).

Thanks @Knitclubchatter will do. This thread has definitely given me the push I needed. It is time to wake up and get on top of things. I used to be so responsible when it came to finances (dabbled with mutual funds, started cd accounts, retirement when I was in high school (I worked during high school and in summers, instead of spending the money I saved - the retirement, I had my dad start, it has been forgotten and only has a few thousand now....). But time to get things back on track again.

@JoJoSM2, thanks for the tip. I plan on doing that! Will speak to an advisor and then start an ISA account to start, and see what else the advisor says.

@caringcarer it sounds like you are set and have a good plan in place. I don't need holidays in retirement, but I am hoping to be able to afford to eat what I want, buy the grandchildren presents etc. I want to be comfortable. I do not need loads of luxuries, but want to be able to buy books if I want, do gardening, take a flight to visit family (I hate flying though, so will keep the flying at a minimum and hopefully they leave near me or they visit!!!!!!). I force myself to get on the plane a few times a year to visit family or take holidays for the kids. I love seeing family, its just the long flight I can't stand...get anxiety.

mamabear you should be able to set up a pension of your own - or at least some sort of savings plan. Try and be more careful & you could start with say £150 a month & see how you go. However I am pretty sure you can set up- a pension even if you're not working.
Also it might be good to set up ISAs for the children or buy them some premium bonds or something. So they have some sort of savings. You could start with something small like £20 a month into a plan for each of them.
Your lifestyle sounds very enviable. We just about get by & we both work, have no cleaner, really old cars, struggle to pay for the occasional meal out etc.. So I imagine you will get more in retirement than lots of us do in working life.
But as people have pointed out, you need some sort of security/back up in case something goes wrong. You should have access to the family money - it sounds like your husband is quite secretive.

£4K a month is £48k a year

No, it's not. You'd have to earn a hell of a lot more than £48K to take home £4K per month.

£4k a month = £48k pa GROSS.

My mistake; I thought she meant they'd be taking home £4K pm.

If you rent out a property you need to complete yearly self assessment tax return to HMRC & you probably need to pay tax on the income

If you are not working are you claiming the National Insurance `stamp' that pays towards your state pension look on www.gov.uk under state pension & National Insurance & child benefit

converseandjeans That’s one thing we don’t have - cars! Never had the need to own a car in London. I walk everywhere, even when my kids were young, pushed them in a double buggy and at one point the nursery run took one hour for me (dropping one and then the other then walking home). Now their school is 8 mins walk 😀 I did have a car in the previous country we lived. But over 15 years in this country and no need for a car. My kids both already have a decent amount of savings. This is something grandparents have contributed in. At the moment it just sits in the bank, but will speak to the financial advisor to see if it makes sense to move it to ISA. My plan was for them to use it to help them get on the property ladder when the time comes. My dh said he will find out if he has life insurance through work. He has insurance if he falls ill. He has agreed to talk about retirement over the weekend. I guess he is the type who just needs a push. But eventually he agrees. He is like this with everything. But if I make an effort he will get things done. It’s like with buying the house. We weren’t even looking to buy. I decided to just see what’s on the market. I found out dream home and he was like “why are you wasting time, we aren’t ready to buy a house etc” but I set a meeting w a mortgage advisor and he realised we were able to. He also loved the house and then it all worked out so we bought the house. Same thing w the dog. He said we aren’t ready to get a dog. No way! I put a deposit down and put our name on the waiting list. 6 months later the dog I wanted was available. I told him let’s just go look. He agreed to do the 3 hour drive to have a look, of course fell in love and now a year later he is completely smitten. He just needs a push. I don’t think he is being secretive on purpose. He had shown me his accounts on the computer when we were discussing money in the past. And it’s not like he knows anything about my accounts.

And I do plan to return to part time work eventually. I will teach part time (In one month I’ll qualify for one course I plan to teach and I will take a year off studies to have the baby, then return to finish the course, which allows me to teach another class). The classes I teach would run during school, or evenings or the weekends for a few hours. It’s flexible. I’m also considering to start dog walking in a few years when my youngest is in school. My friend does this and I’ve met a few dog walkers in the area. I have a dog and spend hours in the park anyway. And mid day we are always look for other dogs to play with anyway 😀

And in regards to renting out a house to live off the money for retirement - that’s ridiculous they tax elderly people!! Will def come up with additional plans.

Thanks everyone for the push I needed!

Initially in the region of £2800 per month (no mortgage and no debts), then when I hit 60 (in 6 odd years) my employment pensions kick in (not as big as dh's), but should add about £400 per month to the pot. I do plan to return to work when we move back to the UK this year, but will stick money into an ISA as opposed to a further pension.

Dh will get his state pension in 8 years, and I get mine in 14 years, so I reckon, once those have kicked in, we should have in excess of £50k pa to live on.

If dh dies before me, I get 50% of his pension, so just over £19k gross at the moment.

that’s ridiculous they tax elderly people!! Why? If you receive above the tax free threshold, then you pay tax, irrespective of age.

Dh retires for the second time this year. It would be nice if he didn't pay tax on his pension in the UK, but he does, and as we will return to the UK, and want to use the NHS etc, then yes, he should pay tax.

Yes, you pay tax on income regardless of your age. When renting a property out, you also need to account for any void periods, management fees, repairs, maintenance etc.

I think you said you're in your 30s? Your lives will be very different when you come to retirement, probably in your late 60s/early 70s.

I am about 5 years from state pension age, DH is 13 years away. We are empty nesters, paid off the mortgage a while back, and have no commuting expenses to speak of, so we don't expect out outgoings to change much when we first retire. We have no expectations of any inheritance. As it stands our income will go up a bit when I retire and take my private and state pensions as I'm working part time at the moment.

When we need to (frailty, money) we will sell our too-large house and downsize which will liberate several £000,000.

But we know our last years of life will be very expensive as we will need paid-for care. We'd expect to be paying around £500/week for care at home by the time we die, or £1500/week in a decent care home. That's probably for about 30 months before death.

It never occurred to me that it was scandalous for me, as a retired person, to pay tax on my income. It's not that much, taxed at source. I would certainly object if I had to pay a lot but then so I would have had I been working.

mama you sound very sorted if kids already have savings etc. Mine have a few premium bonds in the hope they may win something one day! Sounds also like DH needs you to be the proactive one.

Of course you do (and should) pay income tax on earned income in retirement. If you are earning say, £50,000 on income from a large rental property portfolio, why would you not pay tax? If you have assets such that your interest on investments allow you £120k, why would you not pay tax on that?
The idea that all the retired are doddery old ladies sitting in unheated houses eating Heinz tomato soup and crocheting is ridiculous; there’s some very rich retired people in their 50s driving super cars, skiing, sailing their yachts across the Aegean and ‘doing up’ little places in Greece. No reason on earth not to pay tax to support those who are less well off.

£4k per month rent does not mean you will keep £4k.

Assuming this is your sole income you will pay 20% income tax on the first chunk and 40% on any amount over the basic tax threshold. You may also be paying over 10% on agents fees and will need too allow 15% for maintenance and voids.

So your take home will be much less than the headline figure. Realistically you are looking at a maximum of £25000.

As a financial advisor I would generally advise the following;

Maximise your ISA's each. That's £20k pa each put into tax free accounts. If you have more than 10 years to retirement then they should be stocks & shares. Then, when in retirement, you can draw off money on a monthly basis tax free. Not something you can do with buy-to-lets (which as an investment are the least tax efficient ).

Then look at pensions. £3600 can be put in by everybody, even if they dont earn an income. At retirement you can take 25% tax free & then the remaining amount is taxable. However, with the Annual personal allowance currently being £12500 then that's a decent amount to receive tax free. Also, upon death, your dependants can receive the remaining funds tax free. Pension dont die on death anymore