How much money for a confortable retirement?

[Mindfulness99]

I will be 52 this year, DH is 8 years older; I am hoping to retire with him in 5 years time.

How much do we ned for a comfortable retirement; assuming no debts. DC19 will only be 19 so may still need help; however they are not sure they want to go to university.

Perhaps I should continue to work part time but would like some flexibility to travel. We are both from overseas/different continents each.

I am sooo confused. I totally want to retire but all the websites indicate I can't afford it..I'm 63..... At 67 I get full state pension. I have 500k in building societies. I pay 1500 pa service charge. Need replacement car and boiler. At 67 my index linked pension will be circa 26k if I go now. So I'd need to live on savings for 4 years. I think I can pack it in but Google and friends say I'll find it hard. Big expense could be dental and maybe private medical. I've worked full time since 16. It's getting painful now.

Do you do a monthly budget? You need to work out what you need to live on each month.
I tracked all our bills for a year to see what we were spending.
I realised if we downsized and got rid of the mortgage, stopped paying for Netflix, Amazon Prime etc then this would make things a bit more affordable.

Our very basic bills now are £1k a month, my teachers pension will be £1500 a month plus I've got a very flexible job where I can earn a bit of extra money to top my pension up if needs be.

Obviously everyone's circumstances are different and some people may not be able to live on £1500 a month. I just couldn't stay teaching any longer, I was beginning to hate it.

So you have a workplace pension, plus £500k in savings, plus a state pension in four years? You should easily be able to retire now. DH and I retired in our 50s with similar savings (but between two of us) and we have a great life! Our financial advisor told us that if we keep spending as we do, we’ll run out of money when we’re 100 (and that’s without downsizing the house).

Go for it! Life is far too short!

If you are saying that you have 500k in savings in addition to your state pension and £26,000 per annum private pension. You will be absolutely fine. Very comfortable. Go now!

Thanks so much for the answers...The 26k private pension doesn't kick in till I'm 67, so I'd have to live on savings till then. I don't have an expensive life, no dependents, no holidays, so I think I should be ok... I think someone said on this board that pension advisers need you to take out more to keep them in business. I feel that too...all this talk about how you need a million to retire seems extreme to me. I'm scared, I think, of the unknown, .... Dental can easily hit thousands, the car and boiler are falling to bits. My flat is worth around 100k and with the savings ,that's it...whatever is round the corner worries me....but it's getting to the point where the office job is causing physical pain. I'm in the in-between stage ...well enough to work, not sick enough to go through Ill health. The age discrimination in my job is shocking, I loathe it. It's only fear of something expensive round the corner that keeps me there....thanks to the people who posted advice. I need to take a leap of faith, I think.

Depends on what your life looks like and what lifestyle you want. Lots of people might have £16-20k a year if that and it might be plenty.

My poor dad was dead at 69, he retired at 55 thank god. DM wouldn’t go abroad, no mortgage, nice car every couple of years, pubs, U.K. holidays, dog, cats, put me through uni, driving lessons, bought me a car and kept it on the road for me.
I’m loathe to put that much into plans but I have LA pension, put £400 PCM into a private plan, DH puts £1,000 in but that’s to save on tax. We’ll probably both inherit from parents. I’d like to be able to assist DD with a house. I worry about her more than us. I’m 47. I’d like to retire at 57 or decrease days.

@OneCheeryMoose

Seriously, how many people do you think have a million sitting around at retirement.
I have a civil service pension so can't pretend to know anything about private pensions. However I imagine this million figure is people talking about their pension pots which they the use to buy annuities or other regular income
But you appear to have a works pension of £26k. You would of course be taxed on that. So maybe around £1600 a month. Plus about £900 a month state pension.
Plus you have savings. You could take £20k a year out of those savings and still have significant savings
Honestly? If I had half of that, with that pension coming in 3 years I'd be off like a shot.

@Ted27 is correct. With £500k savings at a 4% interest rate you’d earn £20K a year in interest alone, on top of your pensions, and still have £500K in the bank indefinitely.

Your outgoings are minimal, but you’ve saved a colossal amount (well done!) and it takes a real shift in mindset to go from “I need £x per month so I can stick a load in savings” to retirement, where you won’t be saving anything, your worth will only decrease. But realistically of course you could easily afford a big dental bill or new boiler.

Thanks for the comments, really appreciated as I don't really have anyone I can bounce off. It's actually the civil service I work for. Such hard going ... Feeling better about the future...Now think if it all gets too much I can just walk away.

Look at your expenditures, compare to your projected pension incomes, possible investment incomes, and perhaps gradually using up savings. A guess at how long you are both likely to live and make some sort of calculation. It won't be spot on right but will give a good indication.

Don’t know which websites are telling you you can’t afford to retire! People have decent retirement on a fraction of that pension and savings. Unless you are very very extravagant, you can afford to retire to live like royalty

The £500k should be giving an income of about £20,000 could you live on mainly that being frugal for a few years? Then + £26,000 pension so £46,000. How long do you expect to live? From the £500,000 you could take £10,000 or more out each year (if you needed it) and assume you will spend less in your much older age, as you would be depleting the income from the lump sum. It sounds OK to me.

@OneCheeryMoose

I left the civil service 2 years ago. Ive only just turned 60. I did have a preserved pension which I could take at 60. It just about covers my outgoings so I still have to work until Im 67 to get the rest of my CS pension plus state pension. I expect everything I total will be around £27k which is plenty.
You could ask civil service pension for a quote to see what the impact of taking your pension is.
I took mine a year early and it 'cost' me about £500 a year less pension. So very worth it to me

It’s refreshing to read your post! Can’t believe how many are getting a fortune in retirement and still think it’s not enough.

@gottakeeponmoving I completely agree! We can live very well on £30kpa net and that includes a holiday and eating out regularly.

Our bills come to around £23kpa (of which £3+k is council tax) and the remaining £7k is for holidays etc.

I really have no idea what people spend their money on.

It’s also worth pointing out that financial advisors are used to dealing with very wealthy people, so their idea of ‘normal expenditure’ is extremely skewed.

We had one who tried to tell us that we needed £80k a year to live comfortably when we’re already living very comfortably on half of that. He said “But you surely don’t want to be in a position where you can’t treat yourself to a designer bag or pair of shoes?”

I told him I’ve never bought a designer bag or shoes in my entire life and I’m not planning on starting in retirement. I think they believe that if you’re not frittering huge sums of money on fripperies, that you’re living in poverty. It’s rubbish.

Sit down with your bank statements from the last year (and credit card if you had it).
make a spreadsheet - how much did you spend, and on what?
That will give you a much clearer idea what you need in retirement than any ‘standard’ calculations.

Dont forget tax (which you’ll pay on pension income and on any savings income over £1k), and allow some funds for a rainy day and/or dental work, new car etc

I still suspect you’ll have enough to retire tomorrow if you want to

You need to track your spending over a full year to see what’s needed. I think it’s often less than people think.

i am working on needing £2.75k net per month.

What can help a lot and make smaller amounts manageable is if you have some savings behind you. If you can fund a replacement car from savings (at least until state pension kicks in) that helps if income isn’t so high.

Personally, we will have phased retirement income.
At 60 I get my public sector pension of £20k plus £60k lump sum.
That £20k gives us about £1.5k per month. We will take an additional £1k per month from the lump sum. That gives us £2.5k per month. The lump sum will last us 5 years until 65.

At 65 DH will get £20k of public sector pension. So then we have £40k per year.

At 67 we each get the full state pension of £12k. This brings us to £64k. There will also be a few extra £k from later sections of public sector pensions which only pay out at state pension age.

Notice the tricky but is early on. By having some pension income, plus a lump sum ( or other savings) to draw a monthly income from ….this can bridge the gap to state pension age when many get their state pension too.

We will be utilising a lump sum payment (paid at 60) plus some decent interest payments on savings, which will generate several hundred per month.

This could also work from 55 if someone with defined benefit pensions has enough to afford to live in actuarially reduced payments and/or has other income sources such as savings income/rental income. These extra income sources don’t need to last a lifetime but to bridge the gap to state pension age.

Haven't RTFT but if no one has mentioned it so far, take a look at Rebel Finance School and do their free video course. It will tell you all you need to know and more. It's a lot of information, but really worth doing it all. You can play the videos at 1.5 speed and they're still easy to follow.

Thank you. Will definitely do this course, have seen it mentioned a few times in the last few weeks.