How much savings nest egg is needed in retirement?

Yes you can have a lodger who shares your house with you and you can earn £7500 before you pay tax, but not renting out your entire home. Yes, best to get it all checked out, the Revenue will help you out over the phone.

Hi Oopsadaisy12, thanks for replying.

I will check out the tax implications as I don't want to get myself into hot water, with HMRC.

What I meant by tax breaks, was that I have heard that you can rent out a room in your house and don't have to declare any amount under 7500 or you can opt to do it on a "business" footing. Claiming expenses, a portion of service charges etc.

I haven't been doing airbnb for long enough to have to do a tax return yet for the letting, that will come next year. I have recently submitted the latest one and paid before 31st January deadline.

I will have a nosey around, to see if I can find an airbnb advice forum, or something similar.

I read in today's paper that Wayne rooney is being chased for 5 million tax.
Small potatoes really for such a big earner, in fact only a few months wages.
His new baby will not be going without nappies, even if he does have to cough up.

Morgi, I would check out the ‘Tax Breaks’ part of your plans. Apart from some allowances, you will be taxed on all rental income from renting out your home.
You can easily check what State Pension you are likely to receive by going online.
That will help to take some of the guesswork out of your finances.

Yes my husband's state pension is around £16,500 because he paid into SERPS. Its a godsend as his private pension is smallish owing to the fact that although he earned a very good salary in the private sector, he was also made redundant several times and we had to eat into pension saving to keep a roof over our heads.

I am new on the forum, and find this thread very interesting.
I don't know how much pension I will get, I have worked abroad in fits and starts for years.

I was shocked when i saw how little full years I had contributed to.

That's the bad news.

I am divorced, love my independence and travelling.

I managed to buy myself a city centre apartment, and was convinced by a friend to rent it out on airbnb, when I am not there.

It has been very successful, beyond all expectations.

I will be of retirement age in 5 years, I don't if I will retire or not when the time comes.

Although my family live abroad, I want to stay put in the UK, I feel at home.

I am planning to still rent my apartment out Friday and Saturday nights, even when I live in the UK on a permanent basis.

I have heard that there are good tax breaks for this type of rental, and added to my expected state pension, and some savings, I hope to have a good retirement , not megabucks but not exactly poor.

I have friends I can stay with for weekends, they can stay with me too, and also I could even book into a premier inn..........while my apartment is rented out.

Downside......my place is sleek, no clutter (I love clutter) but we can't have everything.
I am used to traveling light, and was looking forward to not living out of a suitcase, but I think I will have to carry on with my nomadic lifestyle.

Of course there will come a day when this is not possible, so I will look at the way
Equity release options, and with savings etc, I hope to be able to finance my old age.

Re doing up the bungalow - I have two friends who have invested large amounts of money in alterations to their homes which they were going to enjoy in their retirement. Both have now been struck with unexpected and probably terminal illness and may never see the work finished. Just pointing out that you can never take anything for granted.

Wilow500, instead of dreading it, why not make a plan? Do some research on groups that are near you that do things that might be of interest. Gardening? NT - annual membership might be worth considering if there are places in your vicinity. Does volunteering appeal? Libraries are free, if your town still has one! Hobbies? How about learning a new skill? Rehoming a dog? There that's keeping you busy! Have fun, whatever you decide to do.

Interesting thread. Like POPS my husband has been keeping a spreadsheet (the size of a house ) for some years now and insists we will be ok with our state pensions, very small personal pensions we had to put on hold when our business closed and whatever income we manage to save between now and when we retire some time in the next year. Everyone we know who has retired say that they manage very well as they don't spend nearly as much once they'd stopped work however if you're planning on renovating a property it's definitely worth overestimating the costs than underestimating. It's quite usual to find unexpected problems once you start pulling a property apart.

We don't live extravagantly - don't holiday apart from visiting son overseas 2 years ago, don't smoke and rarely go out socialising although we do like to have a pub meal now and again. As he keeps telling me not to worry about retirement finances I don't but dread the day we get up and look at each other with nothing to do. Weekends are bad enough now!!

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

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.

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

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?

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.

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.

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.

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.

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.

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.

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.

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

He didn’t defer either

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.

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!

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.

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 ?