Retirement

[shabba]

Hi all

Very random but I'd be interested to get peoples thoughts on retirement and the finacial side of it. What does those at different ages think their plan will be, how much do you think about the finacial side?

Those in retirement do you have any thoughts in hindsight?

Its something I really struggle with - how much do I need, is it enough or too much (i.e not enjoying today). So difficult as you really don't want to be poor, and IF you retired at 65 and lived 20 years you'd need a 400k pot to give yourself just 20k a year, even with a paid off mortage that doesn't go that far (bills would account for at least half that). Likely you want a fair amount to enjoy the first 10 years, then probably naturally start to do less as you get older.

I guess many don't think about it, or might be counting on getting an inheritance, planning to downsize or release equity in their house etc.

[Mauswara]

Two observations from a late sixties retiree.

First, it probably won't be much fun if you don't have a mortgage free home.

And second, there is never enough time to do things, how did I ever find time to work for a living.

[Andym]

Two observations from a late sixties retiree.

First, it probably won't be much fun if you don't have a mortgage free home.

And second, there is never enough time to do things, how did I ever find time to work for a living.

I’d agree with that. Never enough time. I’m fortunate that my pension was ok. And also the state pension bring an old man of 70. As an ex teacher, my pension is a strange one, as no government ever invested a penny of our pension contributions, there is no pension fund.

I’d paid off my mortgage several years earlier, and transport costs are significantly reduced when not going to work every day, not needing 2 cars etc. I’ve had a free bus pass for about 3 years too. Only used it twice, there aren’t any buses in rural Suffolk! But I haven’t had to change my spending plans (I don’t think we have ever been extravagant though). My wife still Keri’s dragging me away on cruise holidays, my younger son still Jerrod asking for more money for his latest disaster, and I seem to survive. The short answer is I think you can adapt to a reduced income assuming you have few overheads (mortgages, car deals, etc etc).

[shabba]

Thanks both, fully agree the mortage needs to go before retirement - I'm fairly on top of that even though it seems a big old amount still left, but I guess its not big in terms of what we paid for the house.

I have no commute costs as work from home and own my car outright so really my spending is just bills, holidays, things for the kids and some savings/investing - oh and all the big ticket items the house needs (badly needs new bathrooms, windows need replacing etc).

I also fear how old I'll be before the state pension is there, and what it'll be like - so trying not to rely on that.

It's so tricky, you could end up dead at 70, or live to 90, its very hard to know!

[Andym]

It's so tricky, you could end up dead at 70, or live to 90, its very hard to know!

That is the really important part. My dad was a newsagent, had no pension cost from the state pension. Worked until he was 69 and promptly died. My brother died on his 59th birthday without retiring. I decided to go at 57, losing 15% of my pension. My wife kept working until she was 60 by which time my sister pension was nearly kicking in. But I’ve seen too many people die before or soon after retiring. .

[Charnwood]

Having retired at 53, later this year I’ll have clocked up 20 yrs in retirement. My wife worked a further 10 yrs and retired at age 48, she’s now been retired 10 yrs. We have no regrets whatsoever and live comfortably on my Company & State Pension which are topped up with my wife’s which she started drawing 3 yrs ago at 55.

I think the most important financial challenge is to make sure you’re debt free even if it necessitates using the pension cash free lump sum to make it happen. One of my best moves was to put all my redundancy and early retirement funds straight into my pension which meant I paid no tax on a significant amount of money. I then drew the maximum 25% out of my Pension which was also tax free.

For me retiring early is the best thing I’ve ever done and I’ve never regretted once, not even for a moment. We’ve also made sure our retirement is also very different to the life we had before and sometimes we have to pinch ourselves to believe it’s true.

Yes we’ve had some challenges in particular my sudden diagnosis of cancer in 2022 which came as a complete shock and this morning I had a complete knee replacement which has freed up a chunk of time to write this post and many more probably over the next 4 days whilst I’m in hospital.

How much money you will need depends on lifestyle but income is definitely more important that savings although the later can enhance the former. You could of course take 5% income from Savings and from experience this would hardly dent your nest egg. You could of course take more in the early years as I’m sure you spend less as you get older and are less inclined to want to travel which is where most of our money disappears to.

My biggest tip would be to retire as early as possible or as soon as you think you can afford to. If possible I would also move house to ensure your accommodation is as suitable as possible for retirement especially if it helps you raise even more capital to put into your retirement pot.

Hope something here however small helps your planning Shabba.

[Mauswara]

My biggest tip would be to retire as early as possible or as soon as you think you can afford to.

Couldn't agree more mate.

The #2 regret of those asked on their deathbed is "I wish I hadn't worked so hard."

The top five, fwiw, are said to be

1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
2. I wish I hadn’t worked so hard.
3. I wish I’d had the courage to express my feelings.
4. I wish I had stayed in touch with my friends.
5. I wish that I had let myself be happier.

That's from this book, haven't read it but there are others which are very similar.

I'm still working on #5

[Charnwood]

An interesting post that one Mauseara. Fortunately for me most of your 1-5 regrets don’t aapply as Retirement is the one thing in my life I’ve got absolutely right. The only one that applies is No2 about working too hard and missing out on the kids growing up, the other is not finding the time to make my first marriage work because I was too busy climbing the career ladder. The positive outcome of this is having a pretty large pension compared with most of my peers, not the best by a long way but it’s up there even having sacrificed more than 25% of my pension to retire at 53. Being retired you also quickly realise that income is more important than capital and it’s this figure you need to focus on when making retirement decisions, One thing for sure in the UK is that you can’t survive on a state pension alone unless you’re prepared to live in poverty. So any young guns reading this, get saving hard and start saving from as young an age as possible.

[Blue Wilf]

Hi all

Very random but I'd be interested to get peoples thoughts on retirement and the finacial side of it. What does those at different ages think their plan will be, how much do you think about the finacial side?

Those in retirement do you have any thoughts in hindsight?

Its something I really struggle with - how much do I need, is it enough or too much (i.e not enjoying today). So difficult as you really don't want to be poor, and IF you retired at 65 and lived 20 years you'd need a 400k pot to give yourself just 20k a year, even with a paid off mortage that doesn't go that far (bills would account for at least half that). Likely you want a fair amount to enjoy the first 10 years, then probably naturally start to do less as you get older.

I guess many don't think about it, or might be counting on getting an inheritance, planning to downsize or release equity in their house etc.

Just read this and having retired 18 months ago (at 61), this is all quite relevant. I am OK on the financial side as have no mortgage or debts, kids are married and have houses etc so all good. You say a £400k pot for £20k a year for 20 years, Shabba but remember you will pay tax on it too! My issue was less one of money and more one of just finding my feet in retirement. I travelled extensively with work and whilst it became less fun, it is still strange to not jump on a plane every few weeks so I have had to fill my time. I have managed that pretty much now but it took me 6 months to a year tonreallybget in my stride.

Having said all of that, I have not missed a single day or a single aspect of the 'work' itself. I now have friends, family, golf, football (why I now go home and away), holidays, dogs, sport of all kinds, cooking and of course grandkids so its all good!

My advice is make sure you have enough to do what you want or think you want - if not, you have to cut your cloth to suit. Get rid of debt before you stop and then fill your days! Enjoy!

[ITFC2024]

If you’re able to retire without debt or a mortgage payment it is certainly preferred. In my case, the pandemic pretty much squashed my retirement plan, but I’m remaining positive. Initially I had planned to retire at 62, but that’s unrealistic now. So, I plan to mitigate my financial resources and eventually reduce my work hours. I think it may actually be better for me. I’m not a golfer although I would like to resurrect my cycling routine. During my lay off and severance pay from my previous job, I managed to pay bills and still be happy. I cycled 20 plus miles every other day, and walked 5 to 10 miles a day when not cycling. My hobby is cooking so I had plenty of time to dedicate to that. I’ve owned two houses during my lifetime, but I think home ownership may be beyond me now. I just wanted to let folks know that you can still live comfortably as you age regardless of financial shortcomings.

[shabba]

Thanks for the reply, just seen this. I’m trying to balance money now vs money when older - I never have any debt except the mortgage which we will work on as although equity-wise in the property it’s good - it still won’t be paid off until im 65. Trying to continue to overpay it little and that’ll increase if and when interest rates drop as it’s been a pain going from 2.0% to 5.7!

Trying to do a little investing each month too. I guess you need a lot of cash in the early years of retirement and then less from 70-80 as you’d naturally not go out as much or have as many holidays - especially if health deteriorates. Don’t want to work much past early 60’s so need to bridge the gap to the state pension and also ensure there’s plenty to go alongside that. We could downsize but that won’t be until later as having a family home for the kids even when they have moved out is important to me as it’s not something I had.