How much monthly income do I need if I retire now?

D

DaveD

Registered User
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I know its a very general question but on average:
"How much monthly income do I need if I retire now?"

Based on the following:

2 adults age 55 and 50
Living in Dublin
No mortgage
Savings of €100k
3 children (2 in 3rd level, 1 in 2nd level)

I'd like to live "comfortably", a few trips abroad each year (Nothing too fancy) and would need to run a car (maybe 2 for a while)

I know I to sit down and work out current expenses for a best guess but whats the easy answer? Would €3000 per month after tax cover it?
 
Some people could do it on less, some would need more It all depends on what your basic cost of living is and what type of holidays your thinking of
Is a 100k all you have ?? if so I'd think its not a runner. Any other savings/pensions or income sources ??
 
As well as your current expenses, don't forget to add in an appropriate amount to replace and repair cars and do maintanance on your house for the next 37 years. ( Boiler service and replacement, white goods, furniture, carpets and flooring, painting).
 
Just myself and my wife. No debts. We reckon we get by on €25k a year. Lots of good holidays included in that. Eat well etc. Two cars.

I do have a bigger income and about €600k in savings/investments but I never seem to touch these. However last year we had a couple of family weddings, one overseas, so we dipped in to the funds for those. It was nice to have it there. But the money spent last year will come back over the next few years.
 
DaveD said:
No mortgage
Savings of €100k
3 children (2 in 3rd level, 1 in 2nd level)
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If you're mortgage free, and enough funds to see the kids through college, there's no reason you can't live comfortably on 3k per month. Lots of people do that - it's all about balancing lifestyle expectations. I'd suggest reducing to 1 car though.
But what are you going to do with your time? There's a danger with so much free time that you pick up expensive hobbies.
 
TrundleAlong said:
I do have a bigger income and about €600k in savings/investments but I never seem to touch these. However last year we had a couple of family weddings, one overseas, so we dipped in to the funds for those. It was nice to have it there. But the money spent last year will come back over the next few years.
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Why do you want it to come back? You can't take it with you, might as well enjoy it.
 
DaveD said:
I know its a very general question but on average:
"How much monthly income do I need if I retire now?"

Based on the following:

2 adults age 55 and 50
Living in Dublin
No mortgage
Savings of €100k
3 children (2 in 3rd level, 1 in 2nd level)

I'd like to live "comfortably", a few trips abroad each year (Nothing too fancy) and would need to run a car (maybe 2 for a while)

I know I to sit down and work out current expenses for a best guess but whats the easy answer? Would €3000 per month after tax cover it?
Click to expand...

€36,000/€100,000 = 2.7 years
 
I'm assuming OP is thinking of accessing pension early, rather than trying to survive off 100k savings.
 
I always think that €5,000 a month / €60,000 a year gross is pretty good once you’ve no debt or accommodation costs.

Probably nets out at €3,500 odd per month.
 
I’m not far off your situation, your projections work, we kept both our cars, it is very doable especially with reserves.

Currently in the Canaries, as I said we are almost the same, go for it with confidence
 
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€3 a month (€36k per annum) is an interesting figure.

It roughly equates to average earnings (per the CSO) and the tax-free threshold for a married couple, once one spouse hits 65. Much beyond that and you're getting into diminishing returns.

With no mortgage payments or rent to worry about, I suspect the vast majority of couples could live very comfortably on €3k (net) a month.
 
Sarenco said:
€3 a month (€36k per annum) is an interesting figure.

It roughly equates to average earnings (per the CSO) and the tax-free threshold for a married couple, once one spouse hits 65. Much beyond that and you're getting into diminishing returns.

With no mortgage payments or rent to worry about, I suspect the vast majority of couples could live very comfortably on €3k (net) a month.
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You most certainly could. But do you want to? Are there other things that you want to do in life that will cost more? The adults in this scenario are pretty young still, so you'd need to plan for c. 40 years income.

And then there's the kids. All still in education and one still in school. They have to be funded. And we seem to be regressing when it comes to adult children becoming financially independent of their parents.


Steven
www.bluewaterfp.ie
 
Thanks for all the replies, I'll add a little more info to clarify:

I'm actually looking 6 years into the future here and considering early "retirement", which in reality means leaving my current job and doing something different. Hopefully this will bring in some income but I've no idea how that will work out so I'm basing my rough calculations on known income streams. Time slips by quickly so 6 years is not that far away. My €3000 per month figure is based on current expenses (ex mortgage and savings), with 2 secondary school children and 1 primary, who will then be 2 college and 1 secondary (non fee paying). The monthly figure is averaged over the year and includes annual costs such as car/house insurance, modest holiday etc.

I have the option to leave my current employment and take a pension payment then or defer it for a number of years. My preferred option is to defer pension payments so that whatever income I might earn from my new career is not all taxed at the higher rate. At any stage I can opt to start taking pension payments in case new career income is insufficient. If I don't earn anything after retirement and defer pension payments our monthly income would be €2250. Pension payments would be €2275 if taken immediately but increasing the longer I defer. I'd also forgotten about an investment plan due to mature in 6 years with a guestimate of €25k.

So, some revised figures:

2 adults age 55 and 50
Living in Dublin
No mortgage
Savings of €125k
3 children (2 in 3rd level, 1 in 2nd level)
Monthly income €4500 (me (€2275, wife €825, other €1400, plan to save €1500 per month) hence €3000.
Savings after another 5 years €215k total.

We'll then be 60 and 55, and 1 specific income stream will stop, reducing monthly income to €3100, hence the plan to allow for this by saving €1500 per month all along. So, in 10 years time we will need to live on the original €3000 per month without any option to significantly increase savings, but should already have €215k. I'm not entitled to the State pension at 65, but my wife will be, but that will just replace her current salary. So, we'll be a little old couple with an income of €3000 per month, savings of €215k, and 3 adult children (1 still in college). I don't to ever be dependant on my children

Or that's the plan!
 
TBH 3k seems kind of low to me.

Have you included car replacement cost (2k?) a year perhaps, service, nct, tax, tv licence, property tax, mobiles etc., servicing of bolier if applicable, costs at college ( travel, lunches, books, student contribution(3k) , socialising, sports , driving lessons etc.), bin costs, replacing windows, bathrooms or floors or other fixes/repairs over long term and finally ever more expensive health insurance and unreimbursed health expenses ?

Being pretty careful but not stingy we come in around 4k, no mortgage or debt, no smoking & little alcohol. ( 2 A plus 1 )
 
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My tuppenceworth - You have one child in 2nd Level and two in 3rd Level. Obviously, they are not working in their true careers yet. Your and theirs near future is unpredictable and could change from good to bad within hours (don't underestimate; perhaps I'm a prophet of doom?). Don't concede any home goals.

You've saved €125K. This doesn't mean you're financially independent and will yield €20K to you yearly for just over 6 years only if you wish. A problem with any one of your offspring could whittle this amount away pretty fast - I'm only putting you on alert and nearly sorry I'm posting.

You're on hold for six years more - Good; this gives you time to think and will whittle away 6 years of some concern.

After Retirement:- Few trips abroad - excellent idea (we do it) - Spend extended time in the south of Spain for €650 per month rental in a good location and live cheaper while renewing your body's well being with some winter sunshine. Gets us out walking, thinking, reading, cycling, exploring and generally good every way in our silver years.
 
€3k/month sounds decent to me for 2 adults with no bills. Your two older should either be gone or contributing. I'm mulling something similar, albeit further out, taking early retirement and using my lump sum to supplement my supplemental pension until the state pension kicks in.
 
mtk said:
TBH 3k seems kind of low to me.
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Dear Mtk,

I'm still mightily appreciative of your help yesterday so I'll go easy on ya!

Elac's specific theory of relativity

Isn't the truth that once you go beyond a certain level of income, what one needs is in part a function of what you've been used to? Say, for example, that you were a successful medic or solicitor, then compared with what you have been earning €3k per month might seem very small indeed. OTOH, for a couple who have been earning a combined gross income of, say, €60k p.a. (whilst paying off a mortgage and raising kids), wouldn't a debt/child free €3k net a month feel like the good times were about to roll?




Oh, personally, I'd find €4k a month a little light:D
 
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The planning is the critical piece, my early retirement came a little sooner than expected but we were over ten years with it in the pipeline and there was University costs in there as well.

The key is to plan and continue to make steps towards your goal.
 
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Let's build the budget from the ground up.

The State Non-contributory pension for a couple is €20k
Let's assume this is a fair assessment of the "safety net" costs of living. So let's add on for those little "luxuries" which presumably this is not meant to pay for.
(1) 2 cars. Easily the most expensive "luxury" for OP. Fuel, maintenance, tax, insurance, depreciation. Again we have official guidance. Once upon a time the duke enjoyed an all expenses paid company car. The BIK was 30% of market value and I thought it was worth it so I put the cost/value of 2 cars at about €20k.
(2) 2 trips a year €5k
(3) Reasonably fancy meal for 2 once a week €5k
(4) VHI €4k
(5) Day to day living expenses a tad higher (shop for clothes in M&S etc.) than what informed the basic safety net €3k
(6) Cigies (optional) €5k
(7) Alcohol (optional) €3k
(8) SKY sports (not optional) €1k
(9) Pressies for the kids (grand kids) €1k
(10) Golf or other hobby €6k
Total: €73k p.a. or c. €6,000 per month

* error spotted by eagle eye elac corrected
 
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