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?

Your good and bills budget seems very low. I pay £350 a month council tax and £190 for gas and electricity. Then there’s broadband, Netflix, phone etc. which probably. Brings me up to £600 before I think about food and drinks.

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,

I agree to an extent. However, OP is 60, so her investment horizon is limited, plus she has no investment experience and might panic if her investment were to (temporarily) drop in value. Plus she’ll need some cash for planned expenditure and emergencies.

I would be thinking in terms of 40:40 or 25:50 Vanguard All World vs Vanguard LifeStrategy ISAs, with the rest held in cash savings accounts. Cash split between easy access and high-interest notice account.

At first I thought that we were going to have a similar amount in pension but then I noticed that your state pension would be on top of £23k, mine is including 🤣 No savings for me either.

I’m very worried about it but at this stage there’s really not much I can do. I could be mortgage free which is something at least. But for me it will be a very frugal retirement, around half of what I’m earning now. Like a PP I will probably have to work at least 2 days a week from 67 onwards.

Yes I may have to rethink bills and food. There are four of us at the moment but I guess that apart from food there will be similar costs when I’m on my own.
C Tax 300
Electric 180 (no gas)
Broadband 40
Insurance 30
Phone 10
Water 50
Then around 200 food. so around £810.
am I missing something? (I don’t watch TV so no costs there)

Some very grim views of the future here! I know I have to plan for things to change and I won’t always be healthy but elder abuse and needing care is not really on my radar. I am very lucky in my heath so far. Not been to GP apart from mammograms and smear tests since youngest DC was born 23 years ago. I keep fit. I have a large and close and loving family including three DC so I’m sure they’ll not let me rot. I know I probably sound naive!

And yes I may not always want to rough it when travelling. Currently I’d be the one on the local bus or eating the street food. Zero interest in cruises or 5 star hotels.

Just difficult to justify spending more of my years in my dull job when I could be in the garden with my book. I would do voluntary stuff. Already a litter picker and park run Marshall and might go back to running a girl guide pack.

Well I have some final salary pensions that will give me around £18k pa from 62. We are squirrelling money away to give us the option to retire at 62. Couples we know who have already retired in similar circumstances tell us they live very well on £42k. If it were just me I would be looking at around £30k I think. V lucky to have some guaranteed income for life plus the state pension so all our saving now is to bridge the gap to 67.

And yes, couldnt agree more re dull jobs and enjoying the healthy years. I'm only hanging on to 62 to get youngest through uni. I'll literally retire as she goes into her last term

It is so difficult to plan & make decisions at the moment as we don't know what the government is going to change. If you get your savings properly invested you could significantly increase your pot & remember if everything is done on the house at the moment that is only going to grow before you have anything significant to pay for & if you only use the interest you will always still have the pot.
I find myself in this weird limbo where I have enough income to retire (widow's pension, private investments & multi-generational household where others contribute) but just can't actually take the step. I don't even factor in the state pension, so that if they change things that will be a bonus currently early 50's.
Even when I retire I will always be a carer for my child (young adult now) as they will never live independently - juggling work & their needs is so tiring, so at some point that will need to change

I would retire and then worry about it if you don’t have enough. Live for the moment and leave the full job. It sounds like your figures are pretty close.

i think the main thing we can’t rely on is the state pension. Who knows what will happen to it in future although I hope there will be enough of a fuss if they try and whip it away from people nearing retirement age! I am 61 and retired at 60 from NHS post but I do one day a week in a related social enterprise job.

I have a very dear friend who has retired on less than that and she really enjoys herself.
She lives a modest lifestyle but it is busy and fulfilled and more importantly she is so happy.

Id say try to live for 6 months on your retirement budget and go for it if you are happy.

Thing is I suspect as this is civil service you’d need to work quite a few extra years to make any signficant difference, and you don’t wish to do that.

if you invest your savings wisely you should be able to take a passive income from it, and even if you don’t spend it, your capital sum should keep growing, giving you options.

i think you want to do it, and you also are accepting of a modest lifestyle in return for that, but you will be happier;

im 57, I’m retiring at the end of this year, albeit on a healthier pension and I think you know when you’re done. Snd I think you’re done.

How confident are you that all DC will be moving out (or at least paying for their own food/bills) within the next few years?

Any DC needing ongoing help could make your pension plans a lot more difficult.

Me too!

You are describing a modest lifestyle. £2k pa on travel especially, is rather low, as are your food / bills.

Given you earn £64k now, I would consider what your actual spending is now (not your DDs) and how it might compare to that. Do you really save £30kish a year currently?

Yes. Carrying on at work would add about £1300 a year on to pension. Obviously I would still be earning and saving too. So two more years would add £2600 annually and about £18k savings. Hardly seems worth it.

Re the DC. They have savings and all plan to move out . One with partner later this year and two to rent together. May not work out so back to reasons to keep my house in the London commuter belt. They are happy and capable and I don’t worry about them! Basically I’ll make my plans assuming they will be fine.

I think you've thought this through very well, OP. I've just retired and we'll see how the finances work out (I have a similar pension, but also a higher-earning partner and kids at uni).

The only advice I'd echo from PP is to put some of those savings to better use, for a "passive income." I have a spread of high, medium, and low risk investments, I couldn't bring myself to gamble everything on the high-yield schemes that some have mentioned!

My plans involve good travel budget but also costs for courses/ interests/ hobbies..
I don't have time for at the moment and materials for those... Agree re capacity for travel roughing it declines so am thinking traveller+ for really longhaul..
This has pushed my plans back a couple of years to 62ish... But equally want to be well enough to do stuff! seeing more and more colleagues that aren't....as they head that way...

I often think I'd love to retire, but I know that in fact I'd be incredibly frustrated and unhappy if all I could afford to do was potter when still in good health.

On the other hand I think I'd be inclined to leave the UK for six month stretches and slow travel in inexpensive parts of the world if I was a totally free agent with £21000 a year net disposable income - I think it could be easily done (you'd need to get rid of the car but perhaps the two of your adult children who intend to rent together could instead take over all the running costs of your house and maintain it, keeping your room for you and meaning you have a cost neutral home in the UK and they have a rent free home where they pay the bills including council tax and day to day small repairs.

If you genuinely are happy to potter you'll also be fine, but I think if you're used to a full time job your world will shrink too much if you just potter from the age of 60, and you'll be old before your time or incredibly frustrated by your financial constants.

I think the suggestion of writing down everything you spend now is a good one, to see how much you honestly and objectively spend on your children versus yourself and the house etc. Going from 64k to 23k is a huge drop even though you'll pay less tax etc. It's really important to remember though that more free time means more time during which you want to spend money - you will save on work clothes perhaps, if you work in an environment that requires a work wardrobe, but you might find having a reduced disposable income very frustrating when you have plentiful time in which to do things which cost money...

@Lumpycat You have an index linked DB pension that makes a huge difference. Your pension should increase each April based on the previous Septembers CPI. £21k plus state pension at 67 is a good pension income.

The deciding factor is can you live comfortably on £21k for the next 7 years and to work that out you need a detailed breakdown of annual expenses.

I would also be making sure your savings are maximising interest whilst minimising the tax you pay e.g. in an ISA wrapper.

I have around £3700 a month currently after pension contributions and usually have around £2k left. Have been putting that towards getting rid of mortgage.

You can earn an additional £7500 a year tax free from renting out a spare room. Maybe do airbnb?

Not really. There are two of us and £500 of that is medical treatment for DH. But that’s more and more likely needed with age.

Are you paying more into a pension to reduce your tax liability?

No one expects the Spanish Inquisition - and no-one predicts they'll have ovarian cancer or s stroke or a heart attack. Had your cholesterol checked recently? Post menopausal women have a heart attack risk similar to men but are less likely to be on statins. No-one expects to fall either but if you just sit in the garden or potter you'll be having one sooner rather than later.

Do civil service pensions allow you to buy extra years or invest a lump sum? If so working an extra year could make more difference to your pension than you think.

I'm torn wtth your figures. Its not a lot of money and I think you will struggle to include jholidays with this budget. And you will struggle if you have expenses such as replacing white goods, unexpectedly replacing your car, an increase in medical bills.
The reason I am torn is because I know somebody who took early retirement and had a very quiet life similar to how you describe your planned retirement. This woman lived for 15 years before passing away at 70. I am glad she retired early and didn't spend her last years working. This woman retired on a CS pension and she ended up taking up cleaning to supplement her pension. She lived frugally and her house was often cold.

Yes but you’re at work every day. When you’re not at work what will you do?