Retirement

[The Don]

Back to the OP.

The claim from the AARP is that you need a pension pot of 20 times your final salary PLUS social security to be able to maintain living standards.

In the UK, median household income is £26,000. If it keeps pace with inflation, at the time I'll be retiring it'll be around £50,000 which necessitates a pension fund of £1 million for the average household. This assumes that there'll still be a state pension.

 

[aggle-rithm]

I've not started to save for retirement yet. I have 2 plans, one is to win the lottery, the other is to die

Yep...unfortunately, my only hope is to die before my 70th birthday, when my term life insurance expires. That's assuming my wife somehow learns fiscal responsibility in the next 20 years and doesn't blow it all in the first month.

 

[MRC_Hans]

The house isn't particularly large and it is comparatively (for the UK) well insulated. Our oil bill is about half of what our friends locally spend to heat their similarly sized houses. Oil-fired heating is just very expensive (likewise bottled gas) and we're not able to get mains gas out here.

This might be your problem (highlighted). As I recall, UK houses are generally well insulated - for heating up the garden . Here, we have a different situation.

The problem about moving is that we like where we live. If financial necessity dictates that we have to move then that's what we'll have to do but after more than 45 years of hard work it will be a shame if we don't get to spend our dotage in the place we will have grown to love.

Sure, but ... if you can't afford it ....

I wasn't looking for sympathy, I was trying to explain the size of the problem. If people are saving a couple of thousand pounds each month for their retirement in the expectation that it'll be a comfortable retirement then they are in for a big shock.

Fair enough, but if people are expecting to have the same level of spending after retirement, they ARE in for a shock, or they need to do some massive saving up

IMO skimping on maintenance is a false economy, especially if you're old. We can't be in the position of having a leaky roof, bad gutters, an ineffective boiler or draughty windows when we are older

Not skimping that much, but whoever gets the house after you may ahve to do some repairs. If your house can't "run" without serious maintenance for a couple of decades, you may have the wrong type of house.

We live in a rural area with no public transport. If we stay here a reliable car would be more of a necessity than it is now

Well, there are other ways of saving on cars than reliability.

I appreciate what you say but that sounds like a recipe for grinding poverty in old age. Currently in the UK funding care for the elderly is a huge problem that will only get worse.

£50,000 a year is not unheard of, £36,000 is the average

I just mean, don't plan to be a 100, because most likely you won't. And if you do get very old, you will probably not need that many hobbies and such.

£36,000 a year does not sound too bad, but depends on the general cost of living.

IIRC you live in Denmark, a country which currently provides a decent state pension and has excellent social infrastructure.

Well, yes, but all that means is that I have been paying a lot of taxes, instead of saving up.

You are also retiring after the best time to retire (which IMO was maybe 10-20 years ago - excellent occupational pensions, good life expectancy.
My parents and Mrs Don's parents timed it perfectly) but before the so-called demographic time-bomb really explodes.

Well, you can't really time your birthday, can you now?

I am pessimistic about retirement but I am taking as many precautions as possible to minimise the risk. Unless something goes horribly wrong, Mrs Don and I will be much better off than the vast majority of those retiring at the same time as we are but still we will be looking forward to a modest retirement at best.

If you can maintain a good house and expensive hobbies (golf and classic cars, indeed ), I wouldn't call it modest.

Hans

 

[The Don]

If you can maintain a good house and expensive hobbies (golf and classic cars, indeed ), I wouldn't call it modest.

Hans

Trouble is, as you've ably demonstrated, we will not be able to keep the house or to afford to be able to pursue these hobbies.

Based on the following assumptions:

• Annuity rates to drop slightly from current rates
• Pension funds will only keep pace with inflation
• Inflation to average 3% over the next 20-25 years
• The state pension to be means tested and only available to those in direst need
• Us continuing to save £2-3,000 a month (over 50% of our gross income)

Our current pension pot of £500k (plus the £500k we will add from now until retirement) will yield a pension of around £12,000 in today's money.

 

[lionking]

I haven't followed all posts, and while I understand the Don's strategy and why he is doing what he's doing, I have simply not paid any attention at all to retirement income. I think I might be okay, with an income well in excess of $100K, and 9% mandated employer superannuation contribution, but I simply dont care. I don't have a clue what my retirement income will be. I'm planning our next big European holiday.

 

[psionl0]

Poverty in retirement is a very real fear for me.

Reading through your subsequent posts, it appears that you are looking forward to a long and active retirement.

Given that this is the case, have you considered supplementing your retirement income with some part time work?

 

[The Don]

Reading through your subsequent posts, it appears that you are looking forward to a long and active retirement.

Given that this is the case, have you considered supplementing your retirement income with some part time work?

Yes, absolutely, as long as companies are recruiting old crocks.

My retirement plan had been to work at Oddbins but unfortunately they went out of business. I'd be perfectly happy picking up some shifts in retail or in a call centre somewhere.

 

[geni]

Downsizing our main home might allow an additional £100-150,000 to be put in our retirement fund and we may have to do just that. It's just a shame that it's unlikely that we'll get to spend our retirement years in a place I hope we will come to love.

Err no. The second to last place you want to get old is the countryside (the last place is the countryside in a hilly area). Your best but is probably one of the nicer suburbs. The reality is that as you get older you will get less mobile. At the same time the public services which you will increasingly require will be located in population centers. Your friends will also get less mobile so if you want to continue seeing them you need to be somewhere that is easy to get to. Also you tend to get a better class of golfclub.

Heaven knows that today's average pensioner is hardly well off but in 30 years time we'll be looking back on this as some kind of golden age where most retired people had at least some comforts.

You are optomistic. I'd say closer to 20. Wait and see what happens when the last of the final salary mob retire.

 

[geni]

Yes, absolutely, as long as companies are recruiting old crocks.

They aren't. Well more accurately they aren't recuriting anyone much and baby boomers are producing a bit of an oversupply of retires.

 

[psionl0]

I'd be perfectly happy picking up some shifts in retail or in a call centre somewhere.

is that the best you can do with your life's experience?

I'd have thought you might start up a small business selling your services. (You must be skilled at something. )

 

[lionking]

They aren't. Well more accurately they aren't recuriting anyone much and baby boomers are producing a bit of an oversupply of retires.

It doesn't seem to be the same here in Oz. The labor market is a bit uneven, but unemployment is 5% and there are skill shortages everywhere, and baby boomers are in demand (thankfully for me).

 

[The Don]

is that the best you can do with your life's experience?

I'd have thought you might start up a small business selling your services. (You must be skilled at something. )

I already run a similar business (a three employee consultancy company). Semi-retirement would be an opportunity to step away from the stress of dealing with clients and employees.