How much savings nest egg is needed in retirement?

I'm very happy for you! My income working full time doesn't even come to that!

Well done on planning ahead we are in London, mortgage and debt free, 69 and 67 yrs out income is a few thousand less than yours and I've been retired 10 yrs OH 2+ yrs and we do have a small amount of savings . We've found we do manage on our income for everything at the moment our savings not being used. We both have card and manage holidays in the UK. If you can save more than do so but I think we all cut our cloth as they say and you will be fine .

We both have cars ?

£2100per month pension really ? Is that all?

My DH and I both work full time (well he works double full time to be fair) and we don’t get anything like that to live on, never mind being mortgage and debt free.

Not sure if this is some kind of wind up OP, but if it isn’t, you should count yourself damned lucky !

We are in dimilar situation. My husband too early retirement and is lucky to have a pension of about 1500/month. I am still working and have more than 10 years ahead so want to stop and enjoy time together. We find it very difficult to figure what will be a decent income so we don't have to change much of the lifestyle we currently enjoy and is not eroded by inflation in the coming years. The figure we came up with is 3000/month for both of us with no mortgage to pay but this should allow us holidays abroad, some help with looking after grandchildren, footbal season tickets and ongoing home improvements.

There is a very rough calculation that says that to maintain your life style in retirement, you need approximately 2/3 of the disposable income you had when at work. What this doesn't take account of is that your life style may change significantly! I would only use it as a rough guide.

It is relatively easy to work out day-to-day expenditure, allowing for some changes, like being home in the day. We then sat down and did a list of what we might dip into savings for. We actually built our own house, so we knew we had future proofed it, and installed new appliances.

Our list was something like:
one more car
one more caravan
wedding gifts for close relatives
rainy day savings

OP - it's a bit unclear to me at what point your pensions will kick in. It also seems that you need to look very carefully at your bungalow.

Gillybob - you highlight the difference becoming evident that those now in their 60s / 70s often divide into those who have good pensions from the public sector or big old-fashioned organisations like banks and insurance companies; and those with smaller pensions, especially the self-employed.

Basic State Pension is about £6,500 a year, so £13,000 of OP's calculations is what most couples would expect without any workplace / private pension. I know there are still a few of our generation who opted only to pay the 'married woman's stamp' which makes a difference.

Gillybob ONS reported recently that the income of the average pensioner household is £29,500, which equates very closely to mymadeupname pension income.

But an average is an average, many people will be getting less than that, some very much less, but others will be getting more, very much more.

On an income of £2,100, there is plenty of room for economies if money gets tight and you should be able to save some if you had worries about this capital.

Basic state pension, is basic state pension, but it is variable and I have a friend whose weekly state pension is £200 a week and DH's is certainly in excess of the basic figure. Mine is around the basic level but, I did not work the 40 years so that this figure is only reached with the addition of the extra pension I get from extra payments taken from me for Graduated Pension and SERPS.

Apparently we spend more in early retirement, while we are still fit and active, than we do when we are older. Not sure that helps but I don't think anyone can really advise on what another person needs unless they know them really well.

How long is a piece of string?

There are so many variables. There was another thread about this a while ago, perhaps there were some helpful suggestions on that.

This was the thread, if you do a search in the box at the top you could find some useful information on there perhaps.

How much pension for a comfortable life?

Thank you all for your thoughts, they are genuinely helpful, and thank you Jamila1108 for steering me to that earlier thread which was interesting reading.

I think 75-80% of what you live on before retirement to be a good estimate. Of course you must count in new car, repairs on home, holidays, gifts, weddings, uni. and other expense extras from savings.

It’s another world M0nica it really is .

gillybob, I am mystified why you commented as you did.

Our projected pension income will simply be the new basic state pension x 2 but not until I'm 66 in five years time. (I am still contributing towards it, trying to make up for the few year's married women's stamp I paid in the 70s).

Taking 2018 / 19 state pension amount that would be £8,545.50 x 2 totalling £17,091.00 before tax.

My H will also get a workplace pension of approx. £10,000 pa (before tax) that we really struggled to pay into when mortgage interest rates were sky high while we both worked full time to raise a family and keep a roof over our heads in an area where a 2 bed terraced house now costs £500,000.

So H's total pension will be £18,545.50 before tax. After tax, around £17,366, which together with my state pension (no private pension) totals £25,900 approx.

We have never been wealthy but recognise we are fortunate to have had good health to work hard throughout our lives (both worked full time since age 15), and picked ourselves up when needed, like 3 redundancies (no big payouts... scary when you have children and huge mortgage) but getting straight back in the fray in whatever job we could find. No inheritance from either side.

We know we are comfortable and are glad that we are able to relax a bit after years of struggling financially. And as I said I think we will be fine on £2,100 per month even though this is an expensive area to live (Council tax is £1,800) but home is home with family and friends so moving to a cheaper area would be a last resort if we had to, but we don't so we won't.

As my pension income will be well below the tax threshold I have transferred the Marriage Tax Allowance to my H which bumps his tax threshold up - it all helps and I thought worth mentioning in case anyone is in a similar position.

My question, feeling that our monthly income would be fine, was about savings to dip into when required. I hope £30,000 will be ok but I do actually worry that it might be a bit tight. I'm thinking about sudden major dentist bills like friends have had in their 70's, and replacing our ancient car and sofas / carpets / repair bills etc, all before a holiday which we could probably save for monthly out of income.

Also, I believe that if it came to care home costs, my H and I would be assessed individually as having savings of £15,000. As such we would fall into the bracket where the state would pay for care. So not exactly wealthy though thankful to be rich in all the things that matter.

I think we'll give up the thought of renovating that bungalow though - I'd just end up sitting in the lovely tranquil garden worrying myself to death about money. Not worth it.

Thanks again everyone for your input.

I read one should have 10 times annual income saved, but I do not think that to be reasonable today.

Maybe the 10 times annual income is to include value of home, less any mortgage?

10 times annual income? I think that might be for a pension 'pot', to buy an annuity / drawdown under the new rules. No way is that a realistic figure to have put aside in savings!

I do think that 30K would be tight, if you think it is to last the rest of your lives and interest rates are so low. Personally I think it is right that you have put the idea of a bungalow on hold, especially if it needs work. You might need to dip into your savings for health issues if the NHS waiting list is too long and there are lots of other things that you don't see coming! I think you are being very sensible in trying to manage your future financial prospects.

10 times annual income?

Mind you, I did hear someone I worked with saying £100,000 is nothing these days and that was years ago.
We don't even have nothing iyswim but we seem to manage just fine.

Thanks, Telly. I am disappointed about the bungalow - the estimated 30k is what I think we'd be left with AFTER it's done up, but renovation costs often seem to escalate out of control and we could be left with a half done up bungalow and very little money, so we know it's a sensible decision.

Re that £100,000 pot, I think it might buy an annual pension income at age 65 of approximately £5,000 at best - no annual rises, no widow's pension. So although it sounds a lot, the pension income it can buy is not a huge sum.

Well let’s just say that the amounts you talk about mymadeupname are way more than we get to live on working much more than full time with a mortgage and debts to pay . I’m not convinced we ever get to retire because I won’t even get a basic state pension until I am 68 ( just 12 years to go ) when DH will be 78. Personally given our health issues and the massive stress we both have everyday I doubt we will ever enjoy a proper retirement, never mind a financially secure one. I have struggled all of my life working full time as a single parent, with not a penny of help from anyone . I really thought it would get easier . How wrong can anyone be ?

Please don’t think I begrudge yours or others more fortunate circumstances I really don’t .

mymadeupname you asked for advice so here is mine take it or leave it as you like. We bought a bungalow that "needed work". Unless you intend to do all the work yourselves then double the cost of what you think you might spend. Ours was liveable but dirty with old units and poorly decorated. We had the loft relagged , the electrics done, new bathroom, and kitchen (not top of the range just basic), a couple of new windows and decorating which was the only bit we did ourselves. At the end, we were broke, fed up and hated the place. As soon as we could, we sold it and bought a flat. I really don't mean to put you off but would hate it if you fell into the same trap we did. Smaller but better condition is far better than big and rundown. Whatever you do, I hope you enjoy your retirement.

mymadeupname
I think you will find that there are many retired and working posters here who would be over the moon to have that amount of money each month and be mortgage free.
I hope that the posters here who have to live close to the bone don't read your post.
Read what you like into that but you obviously have absolutely no idea how little some people have to live on.

petra that’s a pretty mean post. The OP is not complaining about their projected pension, simply asking for advice re savings. Why do you say she has no idea how little some people have to live on? There are people on here much better off than the OP and people worse off. What if someone posted asking for advice about a holiday to say Australia - would you say they shouldn’t because there are GNers who can’t afford such a holiday?