What would a retirement on £3,145 a month look like?

[serin]

DH has retired. He is 10 years older than me and wants me to retire as well. His reckoning is that if I work another 10 years he will be 77! Just 3 years off 80 and it won't give him long to have the freedom to travel much as a couple etc.
If I retired tomrw our joint income would be £3145 per month. If I took my small private pension it would be £3800 in total.
Does that sound like a reasonable amount to live on or am I deluded?

We own the house outright and do have some savings. Our DC have flown the nest.
I grew up in absolute poverty and even whilst our children were small there were times we were really struggling. I think this has affected my attitude to money and I'm terrified of not having a steady income and returning to egg on toast every night.

Does £3800 seem ok as a long term situation? My friends are of a similar age, some retired and some not, money is never discussed so I have nothing to compare with.

It depends on the standard of living you expect when retiring.

A pot of £750,000 (which only a third of millennials will have) will give you a pension of £25-30k per annum.

How much do you think you’ll need?

My mum is mortgage free and lives very well on her pension, pension credit and PIP. She has no private pension.

You have no mortgage, OF COURSE you can survive on almost £1000 a week. Is this a stealth boast?

Honestly, I would carry on working as long as possible. See if you can take some unpaid leave if he wants to travel a bit more. Having that extra, and keeping active longer is good.

@Daisydoesnt is spot on. I actually took out life assurance for DH for the few years before I could draw my state pension. It was worth it for the peace of mind. You can get a kind of life assurance that covers a specific period and then stops, people often use it as a backup when they want have financial obligations such as a mortgage that run for a specific period and then stop.

I get you. I grew up poor, and turning away from a source of income goes against the grain, doesn't it? Its very hard to get past the mental barrier of losing ten years of money, and very hard to willingly reduce income when you feel so much better for the security money brings. Do your sums carefully because your savings should do more for you than make you feel safe. They should provide the means to enjoy your life, so there's a balance, where enough is enough. Work through it on your own.
I agree with PP, your H can't dictate having foreseen the mismatch in retirement age when he married you.
You should also consider the social impact. I'm your age and living the life of a retiree isn't something I want now, and for the next 30 years. I like being in the world of the working, living a younger life rather than an older one. There's only so many holidays you can go on, and a lot of time to fill in between.

Is there no middle ground here? Discuss what these travel plans are and see when and how you can look to make these a reality in the near future? Could you look at taking long chunks of AL or unpaid leave? Maybe go part time when in a year or two ? I don’t think it’s reasonable for your DH to force you into retiring earlier than you wanted or are comfortable with.

In theory, the amount you’ve given IS probably enough for the two of you to live on given no mortgage, no younger children to support. I know families raising young kids with mortgage and childcare bills who earn not much more than that. BUT it’s about what you actually want too, it’s your life.

All due respect to the people replying with many earning years ahead, you know not of what you speak. Income vs outgoings become very different when they are finite and you can’t top up the coffers. Add to that that income is likely to be drastically reduced when your spouse dies (especially if they were the higher earner)

Come back when you are at the thin edge of the wedge in your late 50s then you you would have some understanding. All you ‘youngsters’ max out your pension contributions where you can!

It depends what age you are when you retire, whether you are in good health, and whether you are male or female, and also prevailing and forecast interest rates.

If I was buying an annuity now with say a pot of £200k (I’m a healthy, 55 years old woman) I’d get a much worse income than a man of 70 who was in poor health, for the simple reason the insurance company would reckon that, statistically, they’d likely have to pay out to me for more years than the example man. So they’d offer me less per month than him.

I can’t quote you actuarial rates, but if you think very simply if interest rates were 5% then every £100,000 you’d be able to take £5k a year without affecting the capital. So £400k would roughly give £20k with capital untouched (I think of it like that as I would like to keep a chunk of money for nursing/ medical fees should I need it).

Other factors that affect your annuity income are whether the pension continues after your death to a surviving spouse (we’ve asked OP if that is the case for her DH). As you can imagine, that “costs” more
money to buy at outset. And whether the monthly income is index linked or just stays flat in perpetuity (again, that costs more).

Going back to your point that Google quotes a million, if you just wanted to live of interest of your capital/ pot at 5% that would give £50k.

Not there is enough information in the post to conclude that. If the pension isn't inflation protected when the OP, and her partner lives a typical life in 20 years her £1,800 might have a purchasing power closer to £500 in todays money (although the state pension bit might be protected).

[I am not a financial adviser, and it's probably a good idea to consult one about all this]
I think you need to have a look at your respective pension circumstances in a bit more detail - is your pension final salary, career average or defined contribution? How much of a hit do you take for retiring early, and does it make much difference if you retire before 60, 65 or whatever the state pension age would be for you? And talking of the state pension, do you have enough NI credits to qualify for it yet? Most importantly, do you get a proportion of his pension if he dies? Your options are very different depending on the answer to those questions.

If you don't get any of his pension after he dies, then the small value of your pension is going to be nowhere near enough for you to live on as things stand, so you might want to look at life insurance for him so if he should get run over by a bus then you will still have a lump sum to tide you over to your own retirement. If you don't have enough NI credits to qualify for full state pension at the moment, then paying additional voluntary contributions to take you up to that level will probably be worth it, but IANAFA.

Depending on the pension scheme you're in waiting til 60 to retire might be sufficient to avoid a big hit on your payout, but it's best to ask them if they can do some calculations for you based on different retirement ages, to help you with your planning. While going part time may be superficially attractive as a halfway house between work and retirement, it's a bad idea if you're on a final salary scheme as it'll knock down your pension down a lot, while for career average you'll also take a bit of a hit but not so much of one, as the reduced pay will be averaged out. With defined contribution on the other hand you'll still be adding to your pension pot, so this might be an idea to take you up to 60, and then review your circumstances again at that point.

What I’m trying to say is - I get the impression some people see the headline and think it’s 3K+ for OP alone!

Why would it be any different in London? The main reason living in London is so expensive is housing costs, with a fully paid off mortgage the cost of living isn’t much different to anywhere else. Travel is actually cheaper because you get a Freedom card at 60 that covers tube and bus travel.

Only you know the answer. Do you pay £400 per month council tax or £200? Do you live in a new 2-bedroomed house or a draughty 5-bedroomed rectory? Are you a meal out for a special occasion household or out every weekend?

What is a comfortable retirement for
some is living in poverty for others.

Agreed.

My private pension is on forecast to provide an annuity of around £3000 a YEAR so if you aren’t able to have a comfortable retirement on that per month then things don’t look too rosy for me!

That's more than I earn sp pretty epic!

What an unpleasant post.

This is what I am planning whilst DH wants to fully retire.

At the minute ( well not actually as just finished a contract and looking for new part time job) my annual leave is used for a mixture of holidays and various admin tasks plus ferrying DPs ( an hour away) to various appointments and sorting out paperwork.

If I go part time, I expect that I can use my non working days for that leaving all of my holidays for holidays. We have a dog a son at uni and the aforementioned elderly DPs, so I doubt DH wants to go away for months on end and even if he does I can’t leave my DPs as an only adult DC. If I use all work holidays for going away that gives at least 5-6 weeks and not working every day means the NWD can be added to that for the weeks of travel.

Plus holidays will eat into a set income very fast, so realistically how much traveling can they do on their set budget.

Its a decent half way house as it’s easier to flex hours up or down than it is to give up altogether and then potentially have to start again. But checking the impact on pension is important of course.

That’s my exact income including child maintenance and I pay my mortgage, all my bills and nursery fees and save each month. I don’t live a life of luxury but I each out often as I hate cooking

My mum and dad get around 2k but have low outgoings so the save around 5k a year

Definitely sounds like part time for a while would strike a good balance then.

We have the NHS here if it still exists in 20/30 years time !

It's a little over £750 a week so not close to £1K @pinknailvarnish1

That’s around our retirement income and we live very well, take a luxury holiday once a year and I go on a ski trip with my girlfriends.
We only dine out at expensive restaurants for special occasions otherwise we eat out at regular places maybe 3 times a month. I do most of my shopping at Aldi’s and top up with nice bits from Booths.
My draw down pension acts as a passive income for the last 4 years but that of course can change.
We invested our lump sums, so they are our nest egg should anything unexpected turn up (thinking new hip), help our kids with deposits.
Like yourselves we own our home and cars and have no debt, only normal utilities and Netflix subscription and gym membership.
Hope that helps, I’ve never regretted retiring, love having lots of time for myself, family and friends.

Well, firstly you can do short trips (eg long weekends) without needing any leave.

Secondly, the other option is often to just buy more leave - so you might work say 3 days a week but also buy extra leave so you can take more time off each year.

And the other way a lot of people I know do it is to freelance so they do chunks of work and then take a chunk of time off