What monthly income do couples need for a comfortable retirement?

[sha777]

Hi.
I'm just trying to work out what we need money-wise in retirement.
Can anyone give us a real-life experience of what they live on.
Our requirements are quite simple we have no debt or mortgage.
Couple of holidays abroad per year and like to eat out once a week .
Were hoping £2500 a month will give us that.

There is no right answer to this question. It depends on your lifestyle, your outgoings and in particular the extent to which at retirement you still have mortgage/rent payments and the extent to which you are supporting dependents. On my figures, £3k a month net should give a good living, but this needs to be indexed over time.

I'm not sure why I'm commenting as the OP seems to have checked out

The point PP are trying to make is that it isn't relevant what I can live on, others figures aren't relevant as Council tax, energy costs (big house/ old house/ mains gas or not etc) will differ hugely. Those in urban areas may not need to run a car, those in more rural areas with hobbies/ family commitments/ volunteering may need two vehicles.

I think the difficulty is that the financial world has made out that pensions and retirement income are really complicated when actually it is quite straightforward, what does it cost YOU to live now - that's easy, you have all that data from your bank accounts/credit cards etc. Then do you have sufficient pension income either from Defined Benefit pensions (local government, NHS etc) or from drawing down "pension pots", ISAs etc.

I know that's simplistic but that really is the bones of it.

We could get by on £3k per month (We're aiming for higher initially to give a cushion, we are just transitioning to that now.

The point is made well above about the need for each partners finances to be sufficient to withstand the loss of one partners state pension and any DB pension.

Inheritance tax planning is going to be more important with pensions coming under IHT next year, co-habiting couples will be particularly at risk from this.

As op say, work out your basic annual bills, remove work related expenses and divide by 12.

Add more per month for anticipated lunches out/activities/extra holidays/extra retirement spending, depending on what you think you might like to do. Only you can forecast this spend.

This is what you need per month, it’s personal to you. Can you wrangle your available pension to meet that need?Do you need to cut down or will you have extra if necessary? You probably need to allow savings for big ticket, one off expenses that you’ll inevitably have.
Take into account if one of you dies.

We're both self employed and pay ourselves the standard wage of £12.5k with another £500 of dividends, so £13k each, £26k in total. We paid off our mortgage years ago, so just have food, clothes, utilities, Sky, motoring costs, and 4 or 5 short UK breaks each year (in holiday rentals usually). We're managing fine on £26k between us, and even managing to add to savings. We just don't "waste" money, careful with shopping around, not too many takeaways nor restaurant meals, don't have expensive "gadget" nor hobby fetishes. We're fine on that. It's what we did when we were both working full time and had a mortgage to pay.

What we can't afford on £26k per year are any big costs, such as a new car, new roof for the house, etc., which would have to come out of savings (or pension tax free lump sum more likely).

We'll actually be better off when we retire and get our £12k state pension each, PLUS our own private pensions (probably another £5-£10k each). Probably be tight when one of us dies, and we're down to single pensions, yet costs won't halve, but the survivor would still inherit some of the pension pot to help and we still have savings.

I just don't recognise the "profession" projections of needing £60k plus per year.

It really does depend on the person really as to what kind of lifestyle they lead now and will lead in the future.

We're "lucky" in that we did all our travelling in our 20s and 30s so we've no plans for expensive foreign holidays - we've already seen all the main places we wanted to see. If either of us never saw another airport, we'd still die happy as we've been there and seen it all.

What is the big ticket one off expense likely to be? I’ve come to realise that this type of emergency has never happened to me in 40 years of running my own home and I’m starting to think that it’s unlikely that it will!

My property is leasehold so I’m not responsible for the roof. I don’t have a car and I don’t need one. Apart from possibly the boiler which I get serviced regularly, am I missing something that isn’t likely to be covered by normal household insurance? I think I’m just realising that I’ve been aiming to keep more of a cushion than I actually need and could in fact retire earlier.

I think this is part of my issue around the "magic" of pensions that makes it all more complicated than it needs to be which puts people off properly considering retirement planning. I was convinced it was some kind of dark art for years!

You are presumably responsible for a share of the cost for windows, paintwork, roof etc which you'd want to budget for but dependent on the age etc of the block .

Exactly. A PP says their bills come for £400pm. My council tax alone is almost that much.

It's your outgoings that matter when making this decision, noone else's.

Another PP makes the very important point too that it's key to assess if each of you could survive/ pay the bills alone.

What is "comfortable" to one person is not for another so it's a difficult one to comment on. We pay monthly - 100 for utilities, 50 for internet , 40 for tv , 20 for house insurance, 50 for water, 480 for car, car insurance 40, boiler etc covers 60, pet insurance 100, council tax 250, window cleaner 18, tv licence 15, what else have I forgotten? Groceries are maybe 600, petrol 60 so that's about 1900 a month. Just over 22k a year. That's before holidays and pet accommodations, pet food, clothes, hairdressers, nails , days out, gifts etc. Luckily we both have private pensions as well as state.

It all depends on your lifestyle doesn't it? You describe your lifestyle as modest, but to me 2 foreign holidays a year is bordering on extravagant, also eating out weekly.

DH and I are early sixties, semi retired. We also have no mortgage, very happy with our house and garden, seeing family, going to the cinema on nights when it's cheap, occasionally the theatre or a meal out. Can get stuff we need for the house, (furniture etc) and usually cook for ourselves eating stuff like salmon, chicken, plenty of fresh fruit, vegetables and treats. So food that would have been thought of as luxuries a few decades ago. We run one older car we'll probably have to replace in a year or two.

I am not having a go at your lifestyle, just saying it's possible to be very happy on a modest income, with no mortgage or rent to pay £2k a month would be ample, should even be able to save a bit on that. I mean we would. I don't want to sound smug or anything, but I honestly feel very lucky. I know life nowadays can be a financial struggle though, especially for young families, I feel sad for them.

I would say that on just the state pension as a single person it would be tight though, a couple on 2 state pensions would be ok imo. If no rent or mortgage.

My husband’s latest statement rates his as on track for a ‘comfortable living standard’. His figure is projected at £64,500. But it’s all relative.

Mine is about £35k, I think, plus a good lump sum. So it sounds ok but we’ll be considerably worse off and will have to think about our lifestyles.

Retirement is not some magical new world of unknowns.

You know how much you need to live now. Knock off any expenses you won’t have once retired (mortgage, if paid off, commuting costs, doggy daycare etc) add any costs you might expect to go up (classes, leisure travel)

estimate how many years you’ve got left and what expenses might get smaller (leisure travel) or larger (home help) over time and that’s what you need.

One off the challenges is price volatility. Things change on ways people don't necessarily expect.
E.g. cars used to be cheap, are now relatively expensive. As is fuel, home repairs, food, energy.
I think house prices are going to collapse so that would impact downsizing people. Government's can change things.

So planning sone contingency is important.

Although the OP has said they are not returning, I just wanted to post to reassure people that you don’t have to have megabucks to have a happy retirement. I agree with these posters.
BorgQueen: At the moment, pre-retirement, we are living quite happily on £20k as we are shoving as much as we can into pensions
Badbadbunny: I just don't recognise the "profession" projections of needing £60k plus per year

Coming up to retirement, I started keeping a spreadsheet of our annual spending. Last year, this is the breakdown.
Utilities, insurance, broadband, council tax £5,600
Food, cleaning stuff, toiletries £3,800
Running two cars £2,300
Holidays, meals out, hobbies £5,000
Clothes, hair, optician, dentist £1,000
Garden and DIY etc £3,000
Gifts, charity £1,300
Total for the two of us, £22k, so I guess we are frugal, but I don’t really feel it. We have a nice house and garden, which makes a big difference. We live well, with plenty of long weekends away, although no holidays abroad. Obviously, you need to factor in large expenditures – ours is a second-hand car every ten years! However, we are mainly vegetarian, grow lots of our own veg, and have cheap hobbies.

I too am in my early 60s, and think Pemba’s post sums it up. I really feel for young families, and also single pensioners, as you save so much money if you are coupled up. Luckily, we have savings, but who knows what is round the corner, particularly as we are getting older.

In our last year where DH was still working we spent 28k, that’s 2 years ago and we have no mortgage or any debt to service. Last year we spent 26k on actual living expenses and that included going away for 7 weeks but we have a Motorhome, it was all within the UK. We spent 2 of those weeks on three friends/relatives drives who just all happen to live in beautiful areas in the South West we also bought it last year but I’m not adding that cost on because obviously it cost a lot and is a one off non necessity.

We like hiking and eating pack ups in the middle of nowhere, reading, gardening and video gaming. I’m handy with a needle so buy lots of secondhand clothes and alter them, it’s a hobby I suppose. I also love looking for real quality items. We have always been the type who live under our income. DH additional hobbies are hardcore DIY and running.

We cut down to one car which has been fine. When not travelling about I volunteer.

At some point you’ll probably need to replace your boiler, buy replacement white goods, want to redecorate, replace furniture, maybe need help to maintain a garden, or budget for transport? Also care costs - none of us know whether we’ll need that but it’s very expensive if you do.

I calculated we need £4k a month as a couple which we are on target for by 62.

Wish mine was this cheap, it’s more like £800 a month for a three bed semi,for me! No mortgage.

council tax £160
water £98
gas and elec £145
house and contents insurance £130 (that’s expensive due to a claim last year)
car insurance £35 (not strictly a house expense but a fixed expense)
life insurance £40
vigin media , tv and broadband and phone £45
mobile phone £45
tv license, £12 ??

think that’s about £700

tjere will be a few more subscriptions, Spotify, Netflix, Amazon prime. Guess they’re not essential. Oh and another car insurance but guess when retired we could share a car.

but even if it was £800 a month on expenses then if we had income of £2500 a month then there would be £1700 a month left for food, meals out. Maybe knock off another £600 a month for that. Leaves £1100 for holiday savings, new clothes, one off smaller expenses. Seems reasonable.

OP, I think it might depend have you got some savings for if you had a big unexpected expense such as a large car repair bill or a new boiler??

Some of the amounts I've seen posted for retirement for a couple are what a family of 4 live on. They are frankly ridiculous.

Ive been retired for a year now and you definitely don't need as much as you think you need in retirement.

I have no debt, mortgage paid off and my income is about £2k a month. My outgoings are roughly £800 so plenty of extra to save or spend. Also got savings which are earning some interest too which is reinvested.

DP still working at the moment.

We've done our sums and should be able to continue meeting our outgoings indefinitely on the strength of our planning ahead from a combination of state pension, one v small private occupation, plus drawdown from our SIPP funds.

We shall keep one (the smaller) car as long as possible.

We're planning to relocate and downsize, but not a huge amount, so CT and utilities are likely to be a bit less, but we'll still eat well and drink nice-enough wine. SDLT could be expensive. If anything happens to DH I shall swap homes with DC, who has a convenient two-up, two-down, and we'll "sell" our properties to each other for the same amount.

Our holiday wings have been clipped because DH has to be very careful of UV exposure, so there won't be any long-haul trips to islands in the sun, but we'll manage some city breaks in spring or autumn.

And I shall save £100 per month, just by getting rid of the Sky TV sports subscription. DH will save the cost of two Pilates classes per week!

Badbadbunny: I just don't recognise the "profession" projections of needing £60k plus per year

I was surprised at this too, but more at the moderate level where that seemed enormous. I think part of this huge sum is that they are annualising the costs of big ticket items. This could be a car which might be more expensive than you are used to because previously you could do most of the maintenance yourself and now you want one that lasts longer with less servicing, the usual boiler and roof replacement. It could be the costs of moving to a more suitable property for older age etc. and buying in help to do tasks you could previously do yourself.

My mum went through a phase of replacing the kettle with a small lightweight one, crockery moved to plastic, pan to something tiny and lightweight. She had a rollator and then got through several different kinds, had a wetroom put in and replaced her fridge with a low level drawer type. Needed a different car as she couldn't lift the boot door to get the rollator out.

Tech changes and you end up with different stuff like big screen and face as well as the usual white good replacement. In the past you may have bought second hand and plumbed it in yourself, later you need someone to do that for you.

All the inconveniences of long term ill health. She is now in care and paying all the costs of that and it is a relief that her property should fund another few years.

It all depends on the lifestyle you want of course. We run a car plus a campervan, so that has more expensive insurance etc. We both have hobbies that cost money in terms of equipment etc. They will expand on retirement. If your hobby is watching TV and having a couple of trips away each year then you’re obviously going to spend less.

Inflation.

I think the phrase ‘high ticket item’ is also subjective. For me, I would say anything over about £500 and I think it really is only the boiler that I need to consider. Any replacement furniture, white goods etc will be less than that. A quick google looks like that would be about £2,000 to replace my combi. It’s made me feel far more relaxed thinking more rationally and realising that I can manage very nicely on a lot less than I’d scaremongered myself into thinking I’d need!

I think £45k might be enough if you have paid off the mortgage. Older people feel the cold more so often need additional heating.

i have projected my expenses for retirement - what I spend now, reduce some that won’t exist because children will have left home. Increases some (holidays and maybe a fancier swim
mbweahip at a private pool because I will have more time)

if you increase those at 3% a year for inflation it’s amazing how high they are even in 10 years when I want to start retirement let alone another 10 after that.

I’m coming out at needing about £50k a year before tax as a single person. That £110 a month for gas / electric will be £170 by state pension age and £225 by 10 years after that.