How much do you need to live on in retirement?

This is a very oddly worded question but perhaps a little perspective will help.

According to the government a SPA couple having savings of less than £10,000 and income of less than £14,492 (2022) will have the income made up to that amount and are likely then to get help with council tax and NHS costs.

You seem to be going to have an annual income of around £36,000 which will increase when you reach SPA, so you certainly have more than the government would think you "need" to live on.

According to some retirement experts (the people who sell vehicles for pension savings) you should aim to have 35% of your pre-retirement income plus your state pension.

In reality, the answer to your question about what I or anyone else "needs" to live on will be very different for each person and some will not have the choice you do.

If you have the choice to continue working you have to ask yourself if you want the life your income will give you. There will be personal "fors" and "againsts" for this that I don't think random strangers can help you with.

Good luck and enjoy whatever you choose to do.

As I’m up in the frozen North (not all flat caps and whippets now) £36K appears quite a good income, plus you’ll have taken your 25% tax free lump sum to boost your current savings? Personally, other than housing costs, unless renting, I don’t think there’s any difference in living expenses wherever you live - we all pay the same prices for our essential services and food. If you are a regular reader here you’ll know that a significant proportion of GNs live, and some save, on far less, whilst others have to claim their entitlement to certain benefits.
As one poster mentioned a £900 monthly income from a rental property is a significant figure and that property is an asset which could be sold, using your CGA for HMRC purposes.
Anyway, I’d do what others recommend and list all your necessary outgoings, divide that by 12, and add 10% for anything unexpected.
My DH retired at 55 in 2006, severely reducing his pension, but had 15 precious years of pursing his hobbies, before he died not long after his 70th birthday - another thing to weigh up?
Good luck deciding what to do.

If you can afford it now, it might be a good idea to reduce your future expenses by having your house fully insulated (if it isn't already); install an air- or ground-source heat pump; or solar panels and a battery. With energy prices going up so much, this would be quite a saving in your outgoings, and once the initial investment has been covered by energy savings (i.e. a few years), you will never have to worry about energy prices again!

I am 68, and installed solar panels 8 years ago, and am now having a battery put in too.

Thanks everyone for some very good insights and advice. I agree one spends more than one realises day to day. A year ago I kept a spreadsheet of our food 1 month, it was horrifying, but then I still have teenage sons and they eat me out of house and home.

Ahh. - we didn’t know about the dreaded teenagers - they’re bottomless pits, aren’t they? My BF once said her 17 year old would come in from school and demolish a box of cornflakes with a pint of milk just to ‘tide him over’ until meal time!
At least you’ve done the food budget thing, but it might be interesting to do one for all your outgoings, just for your own benefit and I guess you might have to factor in Uni costs too?

I too was Contracted out.. Majority of my colleagues had no idea about this but in last few years before I took my NHS pension I had to pay the extra NI , I expect you had too.
When I received it, it was only a few pounds less than the full rate my DH gets.
With my NHS pension plus State pension after tax I get around 2k a month that's just me, I'm also still working Bank 2 days a week.
I'm lucky.

20 years ago I was able to retire at 60 with my state pension being paid about a year later. I live in London and by the time I had paid off my mortgage, now on my own, I had no savings.

I found 3 very part-time jobs- two were related to my old profession so paid fairly well. I kept working and saving until I fell down 2 steps and broke my ankle which needed surgery.

My savings do not stretch to annual cruises but I intend to keep myself fed and warm. Like others, I still save monthly and any month now I will receive a big premium bond win.

Council tax seems much the same in different areas but this Mumsnet thread seems to think certain cheaper housing areas are cheaper all round
www.mumsnet.com/talk/am_i_being_unreasonable/3583844-to-wander-what-s-cheaper-up-north-apart-from-house-prices
And The Sun seems to back that up
www.thesun.co.uk/money/15550396/food-cheaper-north-gyms-cinemas-kids-clubs/

I retired last Friday, just me and I live in a one bedroom bungalow housing association owned. I only have my state pension and I'm starting to worry I must admit. I'm 67 and worked from 15. I'm one of the 50s women who had to work an extra 6 years with hardly any notice of the change. I can see me having to look for a job at this rate.

@Georgesgran I have my head firmly in the sand re the dreaded Uni fees. DH says it’s their lookout but I’d like to be able to help, although the fees and general cost of living for students is also a shocker.
I do spreadsheets in my day job so not a big fan of doing the, in my own time, but I admit it is a helpful reality check.
Re the rental property I did a full Reno last year and so made a net loss and no tax to pay at the moment, but certainly I know it’s not as simple as cashing in the rent, Mr HMRC is getting more and more demanding, for example requiring “ payment on account” ie you pay for the past financial year, and then also a 50% payment for the current financial year.
Thanks for the facts and figures @DaisyAnne, based on the government guidelines ( which I’m guessing are for a pretty frugal retirement) we should be ok. It is also useful to have some real life perspective from posters who are in retirement. Good luck with the premium bonds @charleygirl. I got £ 25 last month, 1st prize ever- admittedly I only invested £300.

I am not of a mind set where I could just kick back, watch TV and stay n bed. I would get bored pretty quickly.

I never really "retired" in the full sense of the word. I drew my state and private pensions and ceased employment at 60. However I continued to do research and consultancy for the uni for at least 8-10 years. Alongside this I expanded my side hustle of selling antiques. However I do take 3 months a year off (April, August and December/January).

I could easily take up online tutoring again if people stopped buying antiques.

My advice to anyone coming up to retirement is to find a nice little side hustle that you enjoy doing and that will bring you in extra income.

Mumofthree

I retired last Friday, just me and I live in a one bedroom bungalow housing association owned. I only have my state pension and I'm starting to worry I must admit. I'm 67 and worked from 15. I'm one of the 50s women who had to work an extra 6 years with hardly any notice of the change. I can see me having to look for a job at this rate.

Have you checked what benefits you can claim? Rent makes such a big difference both for those of working age and those that are retired.

Your housing association may have people who would do a benefits assessment for you (they want you to be able to pay your rent ) or you may have a group locally who provide help in finding out what is possible.

Sometimes people don't realise that you can get help with housing costs even if you are not entitled to Pension Credit and £1.7 billion is not being claimed in Pension Credit itself.

Please check it out and have a happy retirement!

MissMoneypenny Not sure uni fees are always as frightening as people think.
My daughter has just finished a 4 year Masters. She got the student loan to cover fees, and then managed to get a bursary because of my salary. So look into bursaries. This covered hall fees, and doesn't need to be paid back. For 3 years she had a Sat job and boosted her savings. I cannot think of any major financial commitment I made at all, except for treats and some big food shops.

Re the rental property I did a full Reno last year and so made a net loss and no tax to pay at the moment, but certainly I know it’s not as simple as cashing in the rent

Renting out property now is a mugs game. You only need to get one "prefessional tenant" who knows the rules and how to manipulate them and you can end up losing thousands of pounds in court fees and lost rent to evict them - not to mention the cost of refurbishing the property is they decide to trash it.

Thank you DaisyAnne....just put a claim in today

Mumofthree

Thank you DaisyAnne....just put a claim in today

My fingers are crossed for you

Did that happen to you @biglouis? Sounds awful, haven’t had that yet but certainly had my fair share of headaches and stress being a landlord.

We are a couple who recently retired early on much less ( income of around £1400). We still have a few years to go until state pension age and we are managing ok despite the cost of living increases. We have no rent or mortgage and no other debts . It has got more difficult over the last couple of months but I am also earning about £150 per month from a very part time agency job , which covers quite a bit of the increase. We do have quite a frugal lifestyle anyway but keep busy with low cost hobbies and are never bored .If you want a slightly more lavish lifestyle it would still be possible on your projected joint income but it wont stretch to luxury living . There are many people who live on less than us and we dont feel poor in anyway .

I also started a similar thread just over a year ago , before we retired . The opinions were very varied and I think the real answer is ... is it enough for YOU to live on . In our case the answer was , and still is , yes .

how long is a piece of string? a lot of us take a drop in our income when we retire,isn't that how it works?! you have a nhs pension,eventually a state pension,and £900 a month rent plus the value of your flat,sorry if i sound sarcastic,but some folk manage on £185.15 per week soon to go up to £200, one of the lowest rates in europe.

Perhaps try keeping a scrupulous record of all your outgoings over a few months, right down to every chocolate bar or cup of coffee in a cafe. I use an Excel sheet for that.

That will give you an accurate picture of what you really need to live now. Then figure out what pension you will receive and see if they tally happily.

I had to retire with ill health and have a relatively small pension from my job. I wish I had been a lot more savvy around money in the past, as things are a struggle at times.

I don't know if there is still something called AVCs ( Additional Voluntary Contributions) but I found them pretty useless after paying in for ages.

Not much!! - according to our local government pension scheme - I've been waiting 5 months and my husband over a year for his pension!!
Ridiculous!!

Worth remembering you can rent out a spare room. I think it’s £80 per week without impacting on tax or pension. Someone here will know. As it’s so low the Mon to Fri market may suit some. Just a thought.
Another thought for the younger retirees is short time fostering or respite care.

Mumofthree I could have retired this year @66 with just state pension and very very small overseas pension to live on..i knew I would not be able to afford to run my 18yr old car so decided to stay in part time work of 16hrs per wk...but find I'm now paying tax on this so just wanted you to be aware...feel I will be working till I'm 70 like a few of GNs on here..unless you have stable finances to have a good social retirement, I can't see me retiring at all...Good Luck with your claim!

I’m amazed at what some people feel is necessary to live on.
Last month I ditched the part time job that I hated - in which I was being taken advantage of for no extra remuneration- and am now working solely at my other 16 hour part time job.
As of next April my annual income will be around £8600. I have a very small private pension - approx £150 pm - that I can take and that plus savings will be that until I get my state pension.
I do have savings and for the next few years I aim to live on what I earn and give myself permission to use the savings for unexpected occurrences and holidays.