How much savings nest egg is needed in retirement?

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.

. 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.

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!

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.

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

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.

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

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.

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?

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.

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.

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 .

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.

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.

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? 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!

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

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

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.

It’s another world M0nica it really is .

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.

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.

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?

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.

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.