How much savings nest egg is needed in retirement?

Petra that is presumptuous and judgemental (and rather mean-spirited) of you and you can't imagine how wrong you are, so I'll tell you.

Long spells spent in care homes as a child (one quaintly called Home Leigh... it wasn't) and homeless and living on the streets as a teenager. I won't tell you what happened to my family.

Life is good now but that did not happen by accident. As soon as I was able I set my sail with steely purpose and grim determination with one aim and one aim only: to build a good life built on kindness and compassion and create a family of my own, and keep us all together until my dying day. I am on target so far but I know that even with hard work and a solid family behind you it can still be very challenging, and not just for older people.

My daughter works hard and pays over £1100 per month rent excluding bills to house just herself and her cat in a tiny tiny terraced house with front door directly on to the street and room to swing just the one cat. It can be bloody hard, life, I know.

Just because someone is OK now does not mean they don't have memories of sleeping rough and rifling through bins for food while blood pours down their legs and there's not a damned thing they can do about it because they don't have money to buy sanitary pads.

Gillybob I am sorry times are hard for you, I really am. You sound like a strong person and I hope you do have good times ahead without so many worries.

Crafting Thank you, good advice! It's more the private garden I crave rather than the actual bungalow - that is quite small and not much to look at but I would love to sit on a bench in my own private space in the evening sun with a good book. Just that.

Thank you, maryeliza54.
That was kind and eloquently put.

This is not the first time this exact sort of post has been on, many people do not earn that amount, how is anyone supposed to know much you think is enough. Only you can decide that. You live within your means.

Another charmingly helpful post. Why be so mean spirited? If you’ve nothing helpful to say, then why not say nothing?

I think it very nice to get a little sample of what people think to be enough. Of course not everyone is the same, but everyone knows what works to themself, and that helps colour the picture for OP.

If people are offended at what OP earns they would be well served to not responding.

I'm happily single and mortgage free. My total net income is about 75% of op' s but with a bit more in savings (thanks to a modest inheritance from parents).
I don't have enough to fund a good care-home long-term so have been seriously considering what to keep and what to spend or give away.
Currently committed to taking 2GD's on holiday. Making a generous contribution to DD's wedding. £2-3k to other 2. Possible bathroom upgrade looming.
I feel that my parents would have wanted me to share my inheritance either by giving to my 3 AC or by conserving a chunk of it for them to inherit.
I get pleasure in sharing now and if I can't fund the lifestyle I 'd like in old age I 'll be happy to know I 've helped my family while I can.
Looking forward to Disneyland Paris with 17, 9 and 7 year-olds instead of hosting a 70th birthday party for myself!

. You live within your means if on £10.000 or £100.000, incomes go from one end of the scale to the other. I know people who have downsized to a flat from quite big houses after a lifetime of work. Some go on cruises and extended holidays, others have a caravan for a week in England, no two people have exactly the same. I wouldn't buy a bungalow that would be a money pit and leave myself with £30.000. Do you want to have a car? Private medical insurance? Why respond to a post, I don't find it offensive just puzzling.

Hello again,

Thank you for your responses.

I won't be earning anything. Our household income when we are both retired will be around £2,000 per month, at today's prices. However my enquiry wasn't about income, it was about the amount of 'nest egg' people think might be needed once retired.

Of course everyone's circumstances are unique but (like Norah) I am interested in the amount of savings people generally think they need to feel secure at this point at the end of a working life. It helps me to guage whether I am being realistic or not. Retirement is a foreign land and while I know everyone's lifestyle is different, I find it helpful.

I am not alone in this. On Martin Lewis's acclaimed Moneysavingexpert website there is a longstanding thread about pension planning, called The Number.
forums.moneysavingexpert.com/showthread.php?t=2146737

Thank you again for your input here on Gransnet but in view of some people's objections to my enquiry in future I will confine financial and pension-related retirement matters to the Number Thread.

Hi mymadeupname - I know what you mean - 10 years ago DH & I retired with savings of £40,000 knowing we would have to dip into them for replacement items (such as car), big house maintenance jobs & contributions to family weddings and such - we manage day to day on our pensions. We were concerned (not worried) about whether the savings would stretch. However, we've managed fine - enjoy our activities & a full social life without spending a lot and so we've still got £25,000 in savings. I'd be uncomfortable going below that - funeral costs spring to mind ?

Thanks, dbDB77, that is very reassuring. It's great to know you are enjoying a full life and have been for 10 years and still have £25k left.

Just going back to that little bungalow that needs doing up. We have had a low offer accepted subject to selling our house, and we've re-calculated the renovation costs and should have around £45k left, plus my small pension pot of £20k which is not included in our projected monthly income of £2,000 per month, so I think we will be ok.

I realise I'm at risk of causing further offence here but what the heck, I'm slightly excited: I am starting to dare to daydream about sitting on that bench in my own private space in the evening sun with a book.

Feeling somewhat shortchanged I would like to know whose State pension is in excess of £200a week, as Ithink M0nica quoted.
I thought even with all the knobs and twiddles of contracted out thingies it was still only £150-ish and mine was 1/3 less than that.
Thinking back I suppose someone who had deferred taking their pension might be getting more whereas, being me, I took the lump sum and had the garden redesigned and landscaped with it!

My neighbour(84) has a state pension that is more than his personal tax allowance so about £12000. This is because of SERPS ( he didn’t have an occupational pension). When his wife died he also inherited a proportion of her SERPS. People have forgotten what a wonderful scheme SERPS was as it especially benefitted those who didn’t have an occupational scheme to join.

He didn’t defer either

My retirement pension is £135 a week Mawboon I too took my lump sum because I thought I d have it when alive who knows if you d be gone six months later
I think no one but the person involved can possibly know what needs, wants, or expectations they have, for instance if I gave advice it would be totally different to someone who was used to a much larger income or more extravagant lifestyle
If in doubt why not take your paperwork to a financial advisor at your bank ( free advice) they would know exactly where to point you

Yes, very difficult to say and depends on individual circumstances. We like to feel we have enough in case the roof needs redoing or the drains pack up. After that it depends on your personality, I think. All our life we have always lived hand to mouth so as long as we can pay the bills and buy food I feel we are very fortunate.
About £20,000 each is a good sum as its below the amount that makes you ineligeable for care. Not that we have that amount.

I would question your decision to buy any new property that is going to make huge inroads into your savings as amounts you will receive in pension is not great. And renovation projects usually go way over predictions.

However, if your mind is made up then you will have to live frugally. Having said that it is amazing just where you can cut back and still enjoy a reasonable standard of living.

My last year of employment I deliberately chose to live on what was going to be my pension and save the residual income. Granted it was more generous than your predictions but it proved a useful way to ease myself into retirement mode.

Whatever you decide I hope you enjoy a long and happy retirement.

Everyone’s circumstances are different. If you’re used to luxury you’ll want loads more in retirement than if you’re used to very little.
I live off less than £10000 per year and have £5000 in savings for emergencies. I have to be careful and would love more so I could give more generous presents, but I have all life’s necessities.

Simple answer is as much as possible. whether it will be enough or not will depend on how quickley you spend it, what basic living costs are for you and extras.

Fortunately I have ended up in a financially secure position, Kids grown and married and also in excellent jobs. Live with a partner who has her own house (still own the house I used to live in). We dont have an extravagant lifestyle. But enjoy weekly meals out and the same stuff everyone else seems too.

I dont seem to be able to spend money and 20 months on from retiring I have not drawn any money from my SIPP. Still have some savings in the bank.

if you are downsizing to buy the bungalow, then the difference in value could give you a nice nest egg, get some decent financial advice (pay for it).

I have a similar upbringing to you.

Good luck with it all.

MawBroon, an acquaintance of mine let slip that her state pension is in excess of £14,000 per year. I know she mentioned SERPs but also deferred her pension.

mymadeupname, I would take POPS’ advice and see a Private Financial Adviser before taking any steps that could leave you struggling financially as you get older. You will need to pay for advice but my experience is that it is worth every penny if you find a good PFA.

Thank you so much everyone - and POPS, I think a financial advisor is an excellent idea if we go ahead with this. We saw one a couple of years ago and he said our retirement plans at that time were spot on (a no brainer, he said - I've never quite understood that expression) but this is a new venture so it would put our minds at rest to go over it all with an expert.

Watermeadow - it is reassuring to know you manage on £10,000 pa even thought you must have to budget carefully. But as you say, you have all life's necessities, and that is really all we need too. We aren't after luxury, just a safe, comfortable home with a garden in a small village with the peace of the countryside nearby. The bungalow is on a bus route and there is a village Post Office and Stores, so hopefully as we get older we will still be able to get about.

I've noticed among our friends that while most are healthy and mobile throughout their sixties, once into their seventies it is alarming how things have started to go wrong, sometimes with the brain (my mother and grandmother had dementia) or sometimes something physical which affects their mobility. Then their strength of character really shows and I am in awe of their determined good spirits.

OldMeg, thank you for your kind good wishes. I understand you urging caution (we are certainly a bit scared at the prospect of what we might be taking on) but perhaps because of my early life I am trying (maybe rather earlier than other people feel the need) to ensure a safe, stable and comfortable retirement. There are no guarantees but if we are careful I think we'll be OK.

That's if we get the bungalow, we've got to sell our house first so it's going on the market tomorrow. My fingers are rubbed raw and chapped from cleaning all weekend.

Just popped back to say I stumbled across this article about pension income which I found interesting:

www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/guides/how-much-will-you-need-to-retire

In summary it says that a comfortable life (not luxurious, but comfortable) requires an annual income of £26,000 after tax.

I think you are being very sensible in planning for your retirement op, along with thinking about how much income and savings you will need. We all need to think and plan in plenty of time to ensure we will have enough to maintain a good standard of living.

The bungalow idea sounds lovely to me, and you are lucky to have found one. Too many are being bought up by developers and demolished to make way for those tiny little flats developers seem to think we will all want to live in!
Not me - like you I couldn't be without a garden.

I hope all goes well with the purchase - fingers crossed.

With regard to your finances, your income is not too bad I suppose but I feel that even your revised savings pot sounds very tight to last you all your lives. Obviously it's a lot better than £30,000, but if you needed to dip into it fairly regularly it could soon dwindle away.

Take holidays, say cruising. A fortnight cruise for the two of you would be around £5,000 or even more.
Now even if you only had one a year and needed to fund it from your savings that would make a big dent in it after a few years. Then of course there are hobbies, days and meals out, maybe hotel breaks. It's what retirement is all about!

The thing is this is our time isn't it, to do what we want, to enjoy life and not be watching every penny.

After all if we don't do these things now, when will we?

One of the things I did before I retired was to make up a spread sheet and once weekly I would check on the values of the various pension funds. I didnt bother with the smaller ones. I also input the values from savings isa's and my salary and the value of my other house.

That gave me a grand total of all my (most of) assets.

I also continued the speadsheet after I retired as I didnt have any pension income for 7 months. at time of pension entilement I added in my state pension at the rate i started with.

My main pension pot was still gathering interest at a good rate. I had been very worried about having enough to live on to a reasonable age (85) if I am lucky.

I took the total of all my assets and divided them by 20 years and then by months and weeks. Assuming no further interest on top of that total for 20 years I found not only did I have little to worry about but probably be quite comfortable for the remainder of my life, I can foresee my monetary requirements becoming less as time goes on.

Using the same method you can see how much you have now and into the future, you could also factor in one off payments etc, whats left goes to the kids!

My partner has a final salary leaving scheme that she has been a member of for most of her working life so I have not included that in my own calculations..

Retirement for me was a huge step that has taken some serious work to get my head round, I am getting there slowly and was quite very grateful that I had kept an eye on my finances etc for the last few years. putting it all down on paper (PC) helped me stop worrying about what I could afford and not...

P0Ps

It also depends on the standard of living that you're used to.
If and when our house sale goes through we'll have a small 'nest egg' for the first time in our married lives. On the other hand our income from other sources will be less.
So we tried to work out how long it can last, and take into account how many more years we're likely to live .
Will we need a new car? Extra help in the house ? etc.
You can only make a calculated guess.

ps "cut your cloth according to your purse".
or "cut your coat according to your cloth".
Not a popular attitude these days.