Is £23k really only a modest retirement income for a single homeowner?

[Lumpycat]

I’m at that stage where I’m constantly doing my sums and wondering when I’ll feel secure enough to retire.
I am a single 60 year old.
I’ve seen the standard responses on this based on some massive survey where it’s state pension levels to just survive. Then about £23k to have a moderate lifestyle and about £32k for a decent retirement.
Own own house.
Would have around £80k put aside for big things/kid’s weddings help.
Live in Surrey/outer London.
Drive a hatchback that I buy at about 2 years old and trade in at about 10.
Three adult children. One cat!
Hobbies very cheap. Reading, cooking, gardening, music, walking, local gym.
Not a shopper and don’t do beauty treatments.
I think I would spend about £5k a year on car including replacing it. Then about £2k on a holiday. Then bills and food around £750 a month so that’s about £15k.
House is fairly modern so not thinking it will need anything major for a decade.
I’m not massively sociable. Have close friends that I tend to meet for coffees/pub quiz/walks.
I don’t get why £23k gives only a very modest lifestyle. Seems like it will be plenty.
Current planning would give me £21k if I retired today then state pension on top at 67.
Really interested to hear from anyone who retired already on similar amounts and the reality of living on ‘below modest income’ levels at my age. What am I missing?

What you’re describing is a modest lifestyle. There’s nothing wrong with that, I’m similar, but one holiday, a 10
yr old car, not much in budget for eating out etc is modest

It depends on what you’re used to in terms of living standards. For many that will be a lot. For many it will be very modest. For me. It would be very modest, which doesn’t mean it’s not doable, just wouldn’t give me the lifestyle I desire in retirement. It does seem like it works for you. So I’d say go for it.

No one can tell you whether it’s enough. You’ll cut you cloth accordingly, but you might want to factor in health costs, replacement bits cost a lot and the NHS is a long old wait.

Agree the definition of ‘modest’ is important. I think one holiday at £2k would be considered modest, certainly.

The problem here is that £23k today is going to buy a very different lifestyle from £23k, or even £30k, in 20 years’ time. This is why I’m currently thinking about racking down to very part time for my 60s rather than retiring completely. But I’m lucky to have that option (probably).

I agree. It seems very possible for a perfectly decent lifestyle (I am slightly younger than you and not yet retired but doing similar calculations often). £5k on a car seems pretty high though?

I never know if this factors in inflation in these figures? So 23 is plenty now but in a decade of things going up 3% each year - it might be really tight.

But i also think a lot are by people trying to sell products to save into because they often suggest i need more money than I have now to live a moderate life, when I will no longer be supporting my chikdren or have a mortgage and my life feels fine.

It's just semantics around what the word modest means.

It's a perfectly comfortable income unless you are used to spending more than that!

It depends how you live. If you find the idea of that lifestyle clostrophobic you could sell the house and burn through the capital travelling the world - but eventually of course your income won't go as far when you're too old for that and have to return to the UK and rent! Probably not wise, but some people would find living a quiet pottering life from the age of 60, potentially for another 25+ years, depressing.

I’m never sure where they actually get these figures from, I’m retired and don’t quite get the magical £23 k for a moderate lifestyle, though will exceed that once I also get state pension, admittedly it’s very difficult to know how we would manage as a couple on pensions as DW currently still works so we don’t live on the pension, but realistically, our total outlay for unavoidable bills is around £600 a month, car costs probably £150 to run in total, so probably have £1k a month which is just to spend, obviously that would be taken up to an extent by food but I reckon we’d still manage to save enough for a yearly holiday just on my pension, so £23k is certainly adequate for a moderate lifestyle

It really depends on lifestyle. I am the same age and I need to work a few more years to get my savings to a better level.

A big contrast in our expenses OP is that I spend, and wish to continue to spend, around £10k a year on holidays. I spend very little on my car and am likely to give up car ownership when I retire. It isn’t a priority for me and I live somewhere with excellent public transport.

I think you should go for it. You have done your sums and you never know how long any of us has to enjoy retirement. Good luck.

It'll vary a lot from person to person, it sounds like you will be fine on that amount. The only issue might be if you get large costs 10-20 years down the line like new kitchen, new bathroom, operation you want to pay for privately as NHS has a 3 year wait and you are in pain type things or you need care.

Car ownership eats up more money than you realise over a year, especially if you include absolutely everything from petrol and wiper fluid through services and repairs and MOT and tyres... If you also include depreciation to account for a proportion of the price of replacement every 8-10 years its definitely going to add up to 5k a year all in.

I'm sorry but I don't think that's enough to retire on. I also think 60 is far too young to retire. You should try and keep up full time work until 65 and then do part time for as long as you can.

My father was foolish enough to take early retirement and thought his pension was decent enough. However the cost of living increases over the past 10 years means he is living a very frugal lifestyle. He stuggles with paying for heating. As well as this, I think mental and physical health also declines with the loss of routine.

23k could be doable now if you are mortgage free, but the value of money is eroding year on year and I think you would struggle to get by in 10 years time if you were to retire now. Also, the NHS is shit and you might want to have some money that you can spend on a few extras like private health care as you get older. Things that will make your life more comfortable as you age.

pensions are index linked.

It's a bit low between 60 and 67 but you will have the state pension on top a 67 so should be fine then.

Wow. Lots of responses. Thanks.
I guess I am describing a quiet pottering life. That’s the nub. Maybe when I’m retired I’ll suddenly find more energy or a new hobby. I currently potter quietly because working full time is exhausting!

I have travelled the world and lived abroad and am not a beach holiday fan so the £2k would be UK hotel short breaks and maybe a big trip to SE Asia or something every 3 years. Am currently quite content with basic accommodation and go to Thailand or Sri Lanka for a couple of weeks every 2-3 years. Usually do a yearly week in Bodrum off season and self catering. Then I have friends and family who live in holiday places so usually squeeze a few weekends away to visit them. Maybe £3k is more realistic overall.

Pension is Civil Service so OK re inflation.

Yes, downsizing is an option but I like where I live and would be good to keep the house for children/grandchildren visits (theoretical grandchildren!). House is worth around £525k but that’s not loads in the SE. Plus I like to go into London.

I guess I’m interested in hearing from anyone who thought like me then found it wasn’t enough. My work is easy and not stressful. Just dull. I earn £64k now but save a lot.

Firstly check whether you need to pay any income tax on your £23k as that could be an unwelcome surprise.

Secondly retirement is not an all or nothing cliff edge. You could always pick up a bit of exam invigilating or something for treats if necessary or even (shocker) go back to work if needed.

Plenty of people manage on £23k or less and you have downsizing options in future as you own your home.

I think you’re absolutely fine but you are making the assumption that things are going to stay the same as you are. If your health takes a turn then things that you may need to get through or adapt to can get expensive. Eg taxis to hospital, private physio, cleaner or gardener while you recover etc. but you are well within your means at the moment and you have leeway in forgoing a holiday.

Also have you included tax in your calculations?

You have to do your budget and be honest with yourself about what you want to do. Personally I am retired and live happily and comfortably on less than half the modest recommended amount. I do run a big car, have a house, 5 cats, go out socially and have a gym pass etc. I don’t have children, and I don’t do holidays and I don’t eat out (live 10 min walk from town centre and home is nicer and free!) - preferring monthly craft workshops. It’s all down to personal expectations and the budget needed to realise them.
If you want a couple of cruises per year and change your car yearly and have lots of birthdays and Christmas spends, then your budget is going to need to be bigger.

What's modest to one is extravagant to another and struggling to another. Spend a year living only on what you will have when you retire, put any excess in to saving for an extra buffer. If you feel you have a good standard of living you're good to go.

Yes. All pre tax. So £21k would give me £1750 a month then another £900 or so at 67.

That’s going to be me in a couple of years, I’ll be downsizing to a small property and am mortgage and debt free. No I couldn’t go on a world cruise, but then I don’t have any big dreams that need fulfilling, I’ve travelled, my kids are grown, I only have to finance me. I’ve become very good these last few years at living a very simple life. I wasted a lot of money in the past on material things that just aren’t important to me now. I love living simply now. And I don’t need a car.

Yes. I probably spend around £2k a month now. So would need around £30k to match that. But I spend a lot on the DC. They are currently all at home but all planning to move out in the next couple of years.
They will have money from their Dad to help with that. So I’m not that worried about needing to help them too.

I’ve been planning for retirement and the big difference between my numbers and yours is your £750 for food and bills. My number is higher - though if I factor in downsize, I imagine I would be closer to yours. You’re also lucky to have an inflation linked public sector pension - mine are all private so subject to what is happening in the market (could buy an inflation linked annuity I guess though I imagine they are not cheap). That’s probably where some of the difference comes in.

With a property like that you’ll be fine, just equity release if you need to.