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?

I am planning to retire around 62/63 assuming I can financially manage it - as part of this I have developed an extensive spreadsheet of costs. This includes bills increased at 3% a year for inflation.

So £110 for an electric bill now looks quite different to £230 in 25 years time which is that same bill uplifted by 3% a year.

I don’t think we can rely on triple lock so I wouldn’t want to assume the increases in SP would keep pace.

there are also other one off costs you need to account for:

buying / repairing a car
house maintenance
potential taxi costs if you cannot drive / don’t have good public transport.
i am factoring in downsizing but then tbh house maintenance costs then just need to be allocated against service charges for a flat

there is a lot of time to fill so I wouldn’t want to not be able to afford coffees out with friends - my daughter has a cinema pass for £13 a month so I am planning I would get one of them.

Kitchen will depend on the quality of the current kitchen, most people replace around every 15 years. A budget one will last 10. Not everyone has handmade bespoke solid wood kitchens with range cookers. Even appliances can add up if there's multiple go at once.

www.bestbuilders.co.uk/guides/insights/how-long-does-a-fitted-kitchen-last-uk-2026

For me its housing that makes the difference. If you own a house outright 23k goes a hell of a lot further than if you have to pay rent for the whole of retirement.

As you own your own home I would say that it will be fine. Modest is not poor, you will have enough money, but maybe will have to think about whether to take one holiday or two!

Pretty sure our kitchen was a bog standard job! The cooker is nice but the rest is probably the same as any other kitchen installed in the 90s. It might not look fashionable any more but it still does everything it needs to do.

I do not know anyone who updates their kitchen every 15 years, thats ridiculous!

What the hell are you doing to a kitchen that means it wont last more than that? My parents bog standard (probably substandard actually, considering all the corners the builder cut) kitchen that went into their new build bungalow 45 years ago was only changed last year, and that was because mum was fed up with how the old one looked. It was fine structurally.

First the Civil service pension is linked to the lower measure of inflation and you may find your personal inflation rate is higher, eroding the value of your income over time. Second how long do you think you will live - your life expectancy is 87. What will be an adequate income at 60 will be a lot less adequate at 80 when you may want carers coming in and to spend money on decorating/ maintaining your property. You may be too arthritic to cut your own nails or wash your own hair. You may also want to spend tens of thousands of health care to avoid living in pain and if you need to get anywhere you may be taking taxis instead of driving there. You may feel the cold more and want more heating in your home. Dental care and glasses prices keep rising and you may want hearing aids. Your friends may start dying and you may want to out more to socialise with other people.

Pensions are taxed, look at post tax income.

Downsizing is expensive and while you may be happy renting at room at 65 you may suffer elder abuse at 80.

Aim to have more when you retire than you think you will need and save a bit extra for the expensive years to come.

It depends a lot on your what you're used to.

When I was a student, living off <£10k and paying rent, I couldn't understand why my aunt was worried about retiring on £20k in a paid off house. Now, with a full-time job and lifestyle creep, I'd not be keen to retire on that.

A starting point would be to calculate what you spend now, and how you see that changing in requirement. But I'd want a good buffer for extra expenses in the future - as you get older you may want taxis, deliveries, handymen for things you currently do yourself.

My kitchen is over twenty years old and, though I would LIKE a new one, it is still perfectly functional……. meaning I don’t actually NEED a new one.

10-15 years is mind-boggling. I don’t know anyone who replaces their kitchen after such a short lifespan.

A lot of things made today aren't build to the same quality as 45 years ago deliberately. Whether its a want or a need it still costs money and personally I would want money allocated for it not assume my kitchen and appliances would last me until death. A kitchen with a range cooker in is unlikely to be a budget one.

Interesting that so many people view holidays as a vital part of their living expenses . I found that many retirees are not willing to put up with the tedious side of travelling so either upgrade which you need to budget for or like others decline to travel at all.

So if the definition of modest income is including holidays I think I should be OK . I am not bothered too much as spent most of my life travelling, so happy to forgo if necessary. I also don't drink or pine for restaurants, etc. I sound really boring but I feel totally satisfied with just being comfortable in my home .

It is quite difficult to plan properly unless you understand what you spend money on pre-retirement. I would set up a spreadsheet and spend time going through a year's worth of spending from your bank statements. Be realistic about what you want from leisure, holidays etc. Given you own your own home, then this makes things much easier, but a lot depends on aspirations.

I reckon I could live a pretty nice life on that. At the moment most of my expenses are my children and they'll be be long grown up by the time I retire, I had them young.

With the house paid off, just need to factor in any big repairs costs. If dp had a similar retirement income we'd be very comfortable. We can easily go down to one car in retirement as we only need two for commuting and ferrying children.

I do that @Cyclebabble and its really useful to have a spreadsheet of what you have spent where. I have mine going back to include everything we have spent on the house and our house one would be the main difference though ours is listed and thatch (our car would be less as we hardly use it and holidays a bit more). This gives an idea of when to budget for house works but everything varies by house and what standard you want.

www.peabody.org.uk/your-home/resident-handbook/catalyst/my-repairs/planned-maintenance/how-often-should-planned-maintenance-works-be-done/

Have you seen the breakdown by category? Though ours varies some we are on the minimum and some over the comfortable (house) though maybe its not including house improvements as they can add to equity though in the current market its not always happening.

https://www.which.co.uk/money/pensions-and-retirement/saving-for-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

This. You should absolutely have that £80k invested to help boost your income each year. No tax on the earnings either because within your ISA. Move it from your cash ISA into investments in a stocks and shares ISA. Bog standard advice would be to put it in an 'ETF'. Something like Vanguard FTSE All-World UCITS ETF or Invesco FTSE All-World UCITS ETF. This would spread your investment over thousands of companies in North America, Europe, UK, Asia, and you can't go too far wrong because it's not as if you definitely need the full $80k back in 2 years time. It would probably take you one morning on line learning about it and it is really very easy.

Many pensioners are having to survive on half that. Yet, there are plenty on here who want the government to abolish the triple lock and the WFA and free prescription and the bus pass and force pensioners to live off the equity in their homes. And when that's gone, what next? The workhouse?

No no no. Never do that. You lose so much doing that. Terrible advice. Anyone thinking of this, please do your research as this will swiftly lead you to a firm no!

But if you have noone to leave your property to it can be a good move. Essentially you just get the money from your house and when you die it all goes to the lender.

I’m single, planning on working until state pension age. I will have a pension of about £32k pa plus state pension when it kicks in, I won’t be mortgage free until 67.

I have a couple of hobbies that cost about £4k a year but cba to travel alone a great deal (been there, done that) in my late 50s so no big holiday costs at the minute.

A car is essential where I live, I usually buy one outright and keep it for five years = virtually no maintenance costs as I trade it in before they become a factor.

It depends on how you feel about work too OP. I can’t imagine not working just yet. My mortgage means I have got to keep going so perhaps I just haven’t allowed myself to think about it.

I may downsize to a 2 bed flat on retirement, depends on what stage my kids are at and their financial position. If they need help to buy a home and I can’t do it without spending all my savings at the time I plan on downsizing and giving them half of whatever is left each.

No . I think they’d like us to take a little pill once we lose capacity to reduce care costs .

My friend is thinking she will do this . She’s worked out her money runs out at 80 and she has no children so isn’t bothered . For anyone who wants to leave an inheritance it’s a terrible idea to use equity release .

lol how wrong you are. If you can’t afford to live, why wouldn’t you free up equity in your home.

it is of course the worst/last option after all others are exhausted, but you can sit in the cold with your heating off for a decade, or release equity and stay at home nice and warm?

Besides you could need to go into a care home and lose everything anyway.

If it is a choice between turning on your heating and getting food and clothing, or passing on your property, your children would rather you used equity release.

If my mum ran out of money I would release the equity for her by purchasing a share of her home. She lives in it still and has money to survive 🤷‍♀️. If I couldn’t afford to do that I would in no circumstances expect her to live her life struggling just so that she can pass on her house, that would be incredibly unfair of me to expect an inheritance.

Sign me up.

£23 total would be modest, £23 plus state pension is comfortable based on what I’ve calculated. We think we’ll have £38k for 2 people once state pensions kick in , have ISA savings for car replacement or big repairs.