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Early retirement… who did it?

Yesterday I put together a
As part of that I checked to see what recommendations there were for retirement income and the current Which magazine advice for a couple is:
  • £18K per annum for "Essential"
  • £26K per annum for "Comfortable" (which was the average in 2021 based on their research)
  • £41K per annum for "Luxury"
Is that each or combined amount for both annually?
 
So how big an investment would you need for an annuity which yielded £31K or £41K p.a. index linked? At say 65, 70, 75. My feeling is that below 60 you’d have to be a squillionaire.

Anyone got a calculator?

Part of the problem is that all my experience indicates that shit happens and it really helps to have deep pockets to deal with it.
 
So how big an investment would you need for an annuity which yielded £31K or £41K p.a. index linked? At say 65, 70, 75. My feeling is that below 60 you’d have to be a squillionaire.

Anyone got a calculator?

Part of the problem is that all my experience indicates that shit happens and it really helps to have deep pockets to deal with it.

The Aviva calculator only goes up to £999,999 as the maximum input but using that and a retirement age of 55 gives an annuity of £32,272. For a retirement age of 60 it gives £38,213.
 
The Aviva calculator only goes up to £999,999 as the maximum input but using that and a retirement age of 55 gives an annuity of £32,272. For a retirement age of 60 it gives £38,213.

Index linked? That’s the rub. Don’t forget that at 55 or 60, say, your life expectancy is long and inflation can happen big time.

you could put £1M under the bed and draw down £30K p.a. for 30 years. The life expectancy for men is 78. So at 55 you can expect 23 years.
 
Index linked? That’s the rub. Don’t forget that at 55 or 60, say, your life expectancy is long and inflation can happen big time.

Not sure, but also worth bearing in mind that it doesn't include the state pension which would become available when the retirees got to the right age for that.
 
Part of the problem is that I feel now as good if not better than I did 20 years ago. It's easy to delude yourself. I suppose one day I'll get ill and it won't just go away.
 
So how big an investment would you need for an annuity which yielded £31K or £41K p.a. index linked? At say 65, 70, 75. My feeling is that below 60 you’d have to be a squillionaire.

Anyone got a calculator?

Part of the problem is that all my experience indicates that shit happens and it really helps to have deep pockets to deal with it.

Doesn't help that annuity rates have collapsed.

I think rather than thinking in terms of traditional pensions it's perhaps more useful to think more generally in terms of retirement income - whether that be from an annuity, from a pension left invested, from a S&S ISA, from property etc.

rHPDkpd.png

source: https://www.sharingpensions.co.uk/annuity-rates-chart-latest.htm
 
Doesn't help that annuity rates have collapsed.

I think rather than thinking in terms of traditional pensions it's perhaps more useful to think more generally in terms of retirement income - whether that be from an annuity, from a pension left invested, from a S&S ISA, from property etc.

rHPDkpd.png

source: https://www.sharingpensions.co.uk/annuity-rates-chart-latest.htm


The downside is that managing the investment is serious work and worry. With an annuity you don't need to think about it at all, it's secure.

As I get older, the less I want to have the adventure of managing investments. I want a life where the money will just roll in and I won't ever have to think about it.
 
Doesn't help that annuity rates have collapsed.

I think rather than thinking in terms of traditional pensions it's perhaps more useful to think more generally in terms of retirement income - whether that be from an annuity, from a pension left invested, from a S&S ISA, from property etc.

My wife's pensions are based on final salary for one and average career earnings for another, so not affected by annuity rates. Mine are though, so I might convert those (or at least some of it) into some kind of property portfolio when I retire - possibly some letting properties in the area where we'll be living in the early part of our retirement.
 
The downside is that managing the investment is serious work and worry. With an annuity you don't need to think about it at all, it's secure.

As I get older, the less I want to have the adventure of managing investments. I want a life where the money will just roll in and I won't ever have to think about it.

Yep very true - you don't need to worry about lean years.

I'm also conscious of the fact that I may lose a few marbles along the way and not be best placed to manage investments.

I'm hoping something super simple like Vanguard Lifestrategy could be a compromise.
 
My wife's pensions are based on final salary for one and average career earnings for another, so not affected by annuity rates. Mine are though, so I might convert those (or at least some of it) into some kind of property portfolio when I retire - possibly some letting properties in the area where we'll be living in the early part of our retirement.

Letting is a fk of a lot of work for 20% of the time and money for old rope for 80% of the time. That 20% is a challenge though. It's like the 53 bus -- for ages there's nothing happening , and then loads of problems come all at once. When they do come you need to dig deep into your cash -- and to keep a cool head.

(I'm going though the 20% now! :eek: )
 
The downside is that managing the investment is serious work and worry. With an annuity you don't need to think about it at all, it's secure.

As I get older, the less I want to have the adventure of managing investments. I want a life where the money will just roll in and I won't ever have to think about it.

I've always wanted that.

I'm not sure that life on £31k would be luxury, maybe £62k for a couple would be ok.

Think about your overheads and what you might want to do. Decent holidays could take £15k easily.

The £1m under the bed concept is fine until you get to 78, and find yourself unusually fit, expecting another 10 years and skint.

I've seen too many of my parents generation retire early and end up miserable and broke having thought they had endless wealth.
 
I've always wanted that.

I'm not sure that life on £31k would be luxury, maybe £62k for a couple would be ok.

£41K was the "luxury" number for a couple (£31K was for an individual) and bear in mind that's also effectively tax-free so is equivalent to a much higher salary.
 
It's interesting to see what people feel comfortable on as a retirement income. My wife and I met as students and I don't think we've ever really grown out of thrifty/tightwad student spending habits! I can't imagine us burning through £41k in a year even if it was an option.
 
It's interesting to see what people feel comfortable on as a retirement income. My wife and I met as students and I don't think we've ever really grown out of thrifty/tightwad student spending habits! I can't imagine us burning through £41k in a year even if it was an option.

I'd hope to do more in retirement than i do working, holidays, seeing the children, weekends away, more live music.

That all takes cash, on top of fuel, insurance, council tax, food and drink, cars and life's little sundries.

We're tight but i can't believe i earn as much as HMRC seem to think i need to pay tax on.
 
With no mortgage etc. (we've already paid for our retirement place) then I think we could live very comfortably on £41K per annum although I do intend to do some calculations to determine our average living costs once stuff stabilises at the new house.

When I last retired it didn't really last long enough to work out what income we needed, however we did spend a couple of months travelling around Europe in our motorhome and all told we averaged £79.08 per day on that trip, which equates to a little under £29K per year. More than a quarter of that was fuel costs (as we did well over 5000 miles of driving in that period), 20% was site costs, 33% was food & drink and the rest was stuff like ferries, public transport, entry fees for attractions etc. I know it's not directly comparable however if nothing else it indicates that we could shut up our houses and go full-time travelling on under £30K per annum (and on a longer term trip with lower average daily mileages and more use of free camping locations etc. I reckoned we'd easily have lived well on £50 per day, which is well under £20K per annum).
 


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