Retirement Income Target - do you have one?

[NorthernBoy]

Okay, so I have been doing some reading about retirement planning and alot of the advice is to have an actual retirement income target in mind whilst you are working / planning. Having a target income based on what you think you will need is useful in working out if you are saving enough for your actual retirement.

Clearly everyone’s retirement number will be different, as we all lead different lifestyles and have different requirements.

For me personally I am aiming on having £2k a month net as my target income in retirement. This would be for 2 people, mortgage paid off.

I reckon we could live okay on this amount with £1200 going on bills, food, car, general day to day expenses. The other £800 would be for meals out, holidays, luxurious, etc. Not saying this would be a lavish lifestyle, but for us I think it would be enough.

Am curious if other people have a retirement income target and if so what is their ‘number’.

I have only recently being thinking about ‘what my number is’ and I think it’s helpful in matching my planning to where I want to be.

Anyone else have a retirement number in mind?

[freespeech]

Okay, so I have been doing some reading about retirement planning and alot of the advice is to have an actual retirement income target in mind whilst you are working / planning. Having a target income based on what you think you will need is useful in working out if you are saving enough for your actual retirement.

Clearly everyone’s retirement number will be different, as we all lead different lifestyles and have different requirements.

For me personally I am aiming on having £2k a month net as my target income in retirement. This would be for 2 people, mortgage paid off.

I reckon we could live okay on this amount with £1200 going on bills, food, car, general day to day expenses. The other £800 would be for meals out, holidays, luxurious, etc. Not saying this would be a lavish lifestyle, but for us I think it would be enough.

Am curious if other people have a retirement income target and if so what is their ‘number’.

I have only recently being thinking about ‘what my number is’ and I think it’s helpful in matching my planning to where I want to be.

Anyone else have a retirement number in mind?

Not sure whether you mean "your" income would be for two people or you are looking for £2k a month net to support two people? If it's the later that is a big ask as you will need a gross income of £30k pa to get to £2k net each month.

[NorthernBoy]

Not sure whether you mean "your" income would be for two people or you are looking for £2k a month net to support two people? If it's the later that is a big ask as you will need a gross income of £30k pa to get to £2k net each month.


I am saying that for my circumstances which is 2 people, my target is to have £2k a month net income. For other people who are single they will have a different number in mind, could be more could be less.

No right or wrong number, just curious if people have a number in mind as to what they think they will need to live the retirement lifestyle they want.

[freespeech]

Not sure whether you mean "your" income would be for two people or you are looking for £2k a month net to support two people? If it's the later that is a big ask as you will need a gross income of £30k pa to get to £2k net each month.


I am saying that for my circumstances which is 2 people, my target is to have £2k a month net income. For other people who are single they will have a different number in mind, could be more could be less.

No right or wrong number, just curious if people have a number in mind as to what they think they will need to live the retirement lifestyle they want.

So are you looking for a £30k pa pension or do you intend to supplement a smaller pension with some other work?

[ihatedogs]

I'm 57, took my pension at 55. Working on today's figures for rm and gov pension I'll have £15k p.a. to live on which'll do me.
I'm a homeowner so I'll have the advantage of mortgage paid off before retirement plus I intend to downsize so hopefully will see a lump sum from that and a lump sum from the pension I'm currently in.
Have to admit I was just rolling towards retirement with no real plan until I got divorced and figured I should start taking things seriously.

[NorthernBoy]

So are you looking for a £30k pa pension or do you intend to supplement a smaller pension with some other work?

My aim is for 2k a month net which requires a gross annual income of 27k once retired. Once retired, I won’t be doing any other paid work.

[bucks123]

My aim is for 2k a month net which requires a gross annual income of 27k once retired. Once retired, I won’t be doing any other paid work.

That's also our target for combined retirement income for the 2 of us. Could live comfortably on 1.5k but that 2k gives extra margin for spending. Fortunate to have paid my mortgage off already which makes a big difference to how much you will need.

I still have 10 years to go before i plan on retiring. I expect once I get to 75 spending will drop a fair bit as I probably wont be bothered with holidays etc (although care costs could come up at some point).

I have also spent a fair bit of time modelling different scenarios to make sure we are both ok if one of us kicks the bucket early!

As with a lot of people nowadays achieving your "number" is complex as it can consist of a mix of DB pensions, state pensions, DC pensions / S&S ISAs (with associated risks) and general savings. If you are reliant on DC pensions/S&S ISAs for retirement income you should also consider how to cope with a stock market crash co-inciding with your retirement as then you will want to protect these investments to allow them to recover or you could run out of money fairly quickly (issue known as Sequence Return RIsk). I am planning on holding a stash of cash as a hedge against this happening (although this has it's own issues as cash savings generally lose buying power due to inflation).

Minefield nowadays - how i wish i just had one nice big final salary pension like my dad!!

[heapsy]

A very interesting and important question. When I've spoken with others I have often said people should ask themselves how much they will need, AND when. It's only by asking those questions that you get any idea. Most people if asked either say a ridiculous figure well beyond reach, or say they have no idea. I asked a colleague of mine what she earns on a flat week after taxes. (I'm for ever doing overtime so never have a flat week). She's also section C like me. I'll use a combination of pension, investments and some cash. I'm hoping to get around £300+ a week after tax. I expect this to rise as I take my other pensions as they are due. It will take some balancing. I don't intend to take any pension early. The reason for this is to get a higher pension when it is due. I'll then take the maximum lump sum, which will also be higher, to replenish any cash I've used to achieve the £300. I'd rather use a bit more cash in the early years, to get an earlier retirement. Then I will rely more on the guaranteed income of the pension later as they become due. I will have three pensions from RM, a private pension I will draw down, and don't mind if this runs out mid 70s. By then I will also have my state pension and whatever money I'm left. Hopefully I wont get myself in a mess by reducing my pension income through early payment as some will. I'm lucky that there will be some inheritance. Obviously I don't know how much or when. That's why I'm doing what I can now. IF it turns out there isn't that much coming, it wont be the end of the world.

One thing to add, if people are thinking of leaving RM early, say 60, and then working on elsewhere, be careful about taking any pension early. You could find the extra tax you'll pay may all but wipe out the wage from your new job. Do your sums!

[stephen500]

My actual pension is £11800 a year. But I am using £57000 out of my lump sum for 7 years to take my yearly income up to £20,000. I think that is a much better use than blowing it on a new car. This pays my bills (Mortgage paid off ) and gives me £7000 a year for leisure. I also will end up with £10,000 to spend on what ever I want.
Sadly for new entrants, they won't receive the pensions us long term employees have.
I don't intend to work again. Unless inflation becomes excessive and I am forced to do so.
If inflation gets up to 5 per cent, I should be ok. But double digit would be a problem.

[heapsy]

Sounds like a plan. Similar in some ways to mine. That's the reason I'm holding back until NRA with the pensions, Just in case things get expensive at the wrong time of life.

[RobertT]

Good thread and 'your number' is something everyone should be considering.

As someone else has said, these days your retirement income can come from many different sources and it's important to access them at the correct time and use them to your advantage.

I think a good way of working things out, is to find out how much you're likely to be receiving in total from state pension age(hopefully that will be enough to live on) and try to replicate that income at an earlier age.

Personally I'm single and will probably stay that way, and plan my number from retirement at 55 to be a little less than my basic full time take home RM wages(I don't do much OT) at around £350 net per week, based on current figures. While also factoring in inflation over time.

I've read some posts on these forums from people saying their time is much more valuable than money and they plan to retire as soon as humanly possible. While others are still working into their late 60's or even their 70's and have 3 incomes(wages, works pension, state pension).

In my opinion they are both extremes and overall I think it's about getting a balance between retiring fairly early and having adequate finances for your needs, and doing the right thing for yourself and your family, which as always, will vary from person to person.

[lordthornber]

It may interest you to know that the Pension industry work on 66% or 2/3 of your working life income as a "rule of thumb" figure for retirement. I used that but it has proved to be far too high for us.

[RobertT]

In practice there's no 'one size fits all' as everyone will have different aims for their retirement.

Personally I tend to spend more money when I'm on annual leave – DIY, hobbies, holidays, etc, as I don't seem to get enough time or energy the rest of the time.
I expect that to continue for a good while after I retire.

However, nobody can be 100% sure of what will happen when they do give up work, as many will have plans that turn out completely differently in practice.
But as far as I'm concerned, I'd rather have a bit too much money, than be struggling on not enough, or working for longer than I want to. It gives me choices!

Do what's right for you, and plan your time and finances accordingly, and don't be surprised if you have to amend those plans along the way.

[freespeech]

It may interest you to know that the Pension industry work on 66% or 2/3 of your working life income as a "rule of thumb" figure for retirement. I used that but it has proved to be far too high for us.

This general guidance depends on your working income. It reduces to 50% somewhere around £50k if I recall.

[NorthernBoy]

My actual pension is £11800 a year. But I am using £57000 out of my lump sum for 7 years to take my yearly income up to £20,000. I think that is a much better use than blowing it on a new car. This pays my bills (Mortgage paid off ) and gives me £7000 a year for leisure. I also will end up with £10,000 to spend on what ever I want.
Sadly for new entrants, they won't receive the pensions us long term employees have.
I don't intend to work again. Unless inflation becomes excessive and I am forced to do so.
If inflation gets up to 5 per cent, I should be ok. But double digit would be a problem.

I think this could work for a lot of people and I am planning on doing the same. Front loading your income for the years 60-67 when you should be healthy is a way of getting more out of your retirement. Yes, there will be a temptation to buy a new car etc with the lump sum, but I will just have to get into the mindset that it is for monthly income.

Our plan is to do as much travelling and holidays as we can in the period as we both love them. Ideally we want to do a big winter holiday each year to somewhere warm like the Caribbean and then shorter holidays to the uk and Europe in the warmer months. Would love to go island hopping around the Greek islands in summer.

We have not ruled out moving abroad, but I just don’t see it happening.