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?

Obviously 23k is after tax but you can do upto £1000 on a side hustle without paying tax or submitting tax return. Your pension is index linked so no worries about what it will buy in 10 years time.

Try living on your pension forecast for 6 months ( don't count commuting or work lunches or professional costs) you might spend more on heating due to being home during the day, will your annual car mileage shrink, will you eat out more or less, off peak holidays can be cheap. If you make sure at least 40k of your 80k savings is in index funds so grows beyond inflation it should be enough for new cars major repairs or private surgery for say a hop replacement. Does the 80k include your lump sum on retirement.

You can live well on less, you can also spend a little of the 80k before 67, knowing that once you get state pension after tax you will have 800-900 a month extra so less likely to need to draw on savings.
I think in early retirement you spend more on travel and going out and about then you slow down and maybe spend less then you arrive at adage if needing to pay people to garden clean etc and costs rise again. You have a house so care costs will be covered by that.

I think that your plans sound doable on that income.

I've got about half what you have in terms of pension and savings and one holiday a year is all I can afford, but I consider myself comfortably off! No car to run though.

I suppose it's what your expectations are: I spent about three years absolutely skint, to the extent that I once survived two weeks on £5 and a lot of pasta, so the way I live now seems very nice to me.

It’s enough for me to have retired at 54 but I have kids , my half of the bills is £650 a month so have £1000 a month for fun

We both retired early and lived on a similar amount between us for about 5 years until DHs old age pension kicked in. House paid for, 1 car, also paid for, I had a bit of a casual job that brought in 2-3k a year, some savings to cover big expenses. We had never had an extravagent lifestyle so could still enjoy the things we liked to do. It was fine.

@Lumpycat

Im 61, at 67 I would have around £25 k including state pension.
Mortgage paid off, I dont run a car. Only child financially independent.
Day to day thats enough for a reasonable lifestyle - I'm not a luxury cruise or designer handbag kind of person.
However I have no savings and downsizing isnt an option. So I worry a bit about my much loved but wonky Victorian terrace.
Unfortunately my master plan of saving during the last 5 or 6 years of working life has been scuppered by a cancer diagnosis this year and I dont know when or if I'll be able to return to some kind of work.

You have savings and the option of downsizing so I think £23k sounds ok to me.

You have a point here, our financial advisor said people tend to spend more in retirement, as they have nothing to do. Unless they can’t afford to then cut their cloth accordingly. So could you feel constrained?

dont think about your lifestyle now, think about what would you like your retirement to look like.

and how many years would you need to work extra to increase your pension . A couple of extra years may not make much difference,

I think you’re allocated £750 for food and bills is far too little tbh . I’m your age and retired and am easily spending 30/50k and it’s really not an extravagant life .

As a retired person there is one thing I would emphasise: your capacity for ‘roughing it’ diminishes as you get older. Flying economy long haul, staying in basic accommodation, eating sandwiches instead of at restaurants…….. you may find that these things become increasingly arduous.

Also, I would try to stay clear of equity release. A lot of people have had their fingers burned.

What you are missing is inflation, that money will be worth less and less each year.

Plus home maintenance like needing a new boiler, needing a new bathroom, kitchen, carpets etc. At only 60 you are going to have to do quite a but of home maintenance in the next 25 years. When did you last have your windows done for eg.

@pragmatismuniversalsentimentalist

Op has already stated that her pension (civil service and State) are inflation proof!

It’s index linked, most pensions are.

Thanks all. A few responses have mentioned their pensions as part of a couple which is very different. It’s expensive being single. Unfortunately I married a cheating idiot.

Yes the £80k would have to cover house maintenance.
I suppose the downsizing/ moving area thing is at the back of my mind if the house becomes too much to maintain. It’s a modern terrace in a small estate. About 25 years old. So will definitely want to do bathroom/kitchen/roof stuff in the next decades.

A great option in Civil Service is to partially retire and work 2,3,even 4 days while drawing some pension. About half of my colleagues seem to do this but the ones in couples more likely to just leave. My particular job doesn’t lend itself well to this though unless I find a job share partner. Feel too old to move jobs but it’s an option. I do know though that it would be massively difficult to match current salary and flexibility and pleasant workplace.

Mixed responses of course because there’s no yes or no answer. As I’m naturally cautious I am tending towards thinking I should stay working for another 2-3 years. It’s so hard when I keep hearing of ex colleagues dying in their early 60s. If only we knew how much time we had left!

Op have you seen a financial advisor. Invested your money? Many moderate risk schemes are returning about 14 percent for the last several years. Of course irs a risk, and you can go low medium high, and you can take your money out at any point, but on 80k I’d be expecting you to bring in a min of 8k per year.

More than enough - I get a lot less and still save a bit

Well it’s not luxury is it? It’s perfectly adequate for a modest life but you won’t be going on holiday several times a year.

My costs without a mortgage are £2100 a month ish .

No. It’s all just in cash ISAs or premium bonds or savings. I should be more savvy about investing.

Also adding another option re finances. I would have two spare bedrooms and live in a sought after commuting and university town so could rent a room or two if absolutely necessary.

£23k is described as moderate, not modest. There's a subtle but important difference.

Moderate could be perfectly enjoyable for you.

Do you have a lavish lifestyle?

See a financial advisor. Isas are good, but you can definitely earn a passive income from your savings.

I think it's less than modest. The CoL is getting so high. 23k, even without a mortgage, means keeping a close eye on basics like heating, electricity, water, clothes, petrol and an even closer eye on treats and luxuries.

And 80k for extras is nothing at all. You could live into your nineties! That could be around £2.5k per year to cover repair and replacement of essential white goods, car, as well as wanting to give money towards adult DC weddings etc. In 30 years time, 2.5k could be the equivalent of £250 these days.

If I wanted to retire at 60 on that money, I'd take a part time job - just a couple of days a week, to top up my income - spend 50% of it on treats so life could be more enjoyable, and put 50% away to build a bigger nest egg. Even £100 pw could make a big difference.

Renting out a room or two is a very good idea. Because of housing shortages, people who take in lodgers can earn £7,500 p.a. tax free. That would bump your pension up to over £30k a year.

I am a single parent with no benefits other than child benefit and I earn around £19k a year (mortgage paid off) so I know £23k would be enough for me to retire per year. It’s all relative i suppose

What about a middle ground where you go part time for a while first /or buy extra leave if you would prefer time off in blocks?

Or retire fully but then do some consulting from time to time ?

I'm always curious on these threads when people talk about "needing" a new kitchen. That surely can't be a frequent expense? Ours is at least 25 years old now and I don't see any need to replace it. The appliances maybe from time to time (although the range cooker is ancient and going strong!) but not the entire kitchen.

Depends on hidden costs
Your expectations
Any inheritance ?
Ability to work part time ?
Could you downsize ?
Rent a room out ?
Side hustle a hobby ?
Electric & gas will only rise
House maintenance costs - windows fail tiles fall off roofs.
Washing machines break
In last month my dishwasher broke the cat needed vet treatment and due to a hospital appt in another city we had an unexpected hotel night. Total cost £550
No problem both still working.
I did comment though good job we’re not retired !
Dental bills if private
New glasses
Car tyres
Insurance goes up as you age
It’s really so variable .
My sister lives on very little I am hoping to retire on 4-5 times her income but we are entirely different in our expectations .I would do a really accurate budget then allow for inflation and factor in any extra money that might come your way or you could earn .
Only you know .