Key Post Some wealthy people are worrying unnecessarily about their finances.

Brendan Burgess said:
This is a very interesting thread about how much you will actually need in retirement. It would be great if someone could summarise it with up to date figures in the format that Standard Life uses.

Key Post - How much will you spend in retirement?

Obviously this will vary enormously but I recently came across this calculator from Standard Life that I thought was quite interesting - https://www.standardlife.ie/tools/having-enough-money-when-you-retire#pensions-dialog1
askaboutmoney.com

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The Standard Life calculator's basic living expenses figure is based on this (the 2021 version):

Poverty and Deprivation Survey on Income and Living Conditions (SILC) 2021 - Central Statistics Office

www.cso.ie www.cso.ie
The latest data available is for 2022:

Survey on Income and Living Conditions (SILC) - CSO - Central Statistics Office

www.cso.ie www.cso.ie
Might also be an interesting exercise to compare it with the ISI's Reasonable Living Expenses guidelines.

Reasonable living expenses

www.gov.ie www.gov.ie
But, ultimately, the best basis for making decisions/plans regarding the income/means required for retirement is the specific actual budget/expenditure of the individual(s) in question rather than some generalised guidelines/calculators.
 
There's far too much focus on the pensions industry on having a pension income expressed as a proportion of pre retirement salary. It's complete nonsense, as it bears no relation to 99% of people's spending. The thrifty are living well below their salaries while the financially reckless are spending in excess of their income.

Like has been said here before, what matters is your expected spending on retirement. Even taking your current expenditure, less mortgage payments, and applying an assumed rate of inflation is a much better starting point.
 
time to plan said:
Some interesting perspectives. I'm not convinced that a state pension makes for a comfortable retirement even with mortgage paid off. But let's say you want to double it. What size pension fund would you need? I reckon 385k would give you a 96k lump sum and then a 290k fund which you could draw down at 5% per year from age 66. It's not the huge pension pot that is often touted, assuming you start reasonably early in life.

Now, retiring before state retirement age is a whole other matter.
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While I’m not retired, I’ve asked the question of retiree’s who are having a very active and enjoyable time…the number for a couple to enjoy nice hols, nights out (dinner & pints) etc 1k per week mortgage free
 
Where you live after retirement matters too. For example, I have retired aunts on similar incomes in Dublin and down the country. Dublin Aunt has no car, she can take free public transport 99% of where she needs to go. Rural Aunt can no longer drive for health reasons and she either pays €€ for a taxi or asks for a lift which is very restrictive.

Dublin prices are higher for some things but it's not black and white. Dublin Aunt can shop around at her leisure in Lidl, Aldi, Dunnes, etc. but Rural Aunt only has 1 shop locally and it is not cheap.
 
Sunnygirl69 said:
Well said Brendan, I'm glad you posted this.... Some of the posts I read about 2 million pension pots etc. I just thought, are some folk never happy with what they have. Lot of wise words in what you said.
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A €2m pension pot delivers pension income of around €60k a year. That’s not massively more than the average salary. There are lots of people in Ireland earning lots of money who couldn’t get by on €60k a year. Equally there are people for whom €60k would be a king’s ransom. It just depends, different strokes for different folks.

I’ve actually done my own numbers and if I was retiring today I estimate that I need €5,000 a month net of tax in today’s terms so that’s the starting point for my own planning.
 
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This is a great thread and a lot of sensible observations. Have been tracking too like Cervelo for past 5 years and our magic number is 40k and that includes 4 holidays of approx 35 days abroad in year.for two people. Mortgage free and no car loans. This will increase to 45k p.a when car needs changing.
 
Sue Ellen said:
But that's a bit of a mé féin attitude. Perhaps they have an obsession with qualifying for the full state pension because they are not financially in a position to provide for a private pension.
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Very good point. Other possible reasons are people hoped to retire at age 66 but the goal posts moved to 70 years of age. Rental properties haven’t realised the expected returns due to legislative changes. Defined pensions became defined contribution. Marriages fail and pension income is halved. Illness in the family or extended family. Children need more support than anticipated. Economic changes.
 
For what it's worth, the vast majority of my own expenditure is via my debit card/current account with a few annual items on the credit card (insurances etc.). That means that downloading 12 months of transactions from online banking allows me to analyse/categorise expenditure in order to ascertain my actual budget per annum and per month is relatively easy. Obviously there are always incidentals and contingencies and "padding" to be factored in. But I suspect that most others could use a similar approach?
 
Brendan Burgess said:
It would be great if someone could summarise it with up to date figures in the format that Standard Life uses.
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Not sure how accurate Standard life's calculator is as the headline figure of €15,158 seems to be just a 60% of the national median income
But from my own 2023 figures and removing Mrs C from the equation I come up with a with a slightly lower figure with a couple of additions

Groceries€3120
Gas€2280
ESB€1175
BB€360
Refuse Collection€210
Mobile Sim Only GoMo€120
TV including TV Licence€500
Car Insurance, Tax including, a full tank every month and servicing€2500
Health Insurance Laya Control 300 Create€1500
House Insurance€400
Property Tax€497
Total for year 2023€12662

Brendan Burgess said:
So how much do you need to have a comfortable retirement?

If you own your home mortgage-free on retirement and your only income is the state pension, then you can have a perfectly adequate and fulfilling life.

But of course, it’s much better to have a good private pension or other wealth in retirement.
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I doubt very much if a single person could/would have what most of us would call a "fulfilling life" on the remaining balance of €2000
But you can very much live on or more accurately survive on should you have no alternative income stream
 
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Spoke with a guy working in pensions for many years about how much people he knows on pension live on. He said 20k per annum would be quite comfortable for many with many surviving fine on the state pension. His point was that many people just don’t spend very much beyond essentials, particularly after mid 70s. No idea how accurate this is.
 
It is possible to be creative around holidays as well. If 2 couples double up for a holiday rental share, you can get very good deals in the winter months (outside of Christmas holidays in places like the South of Spain. Then consider the savings on heating.
 
Dododo said:
Spoke with a guy working in pensions for many years about how much people he knows on pension live on. He said 20k per annum would be quite comfortable for many with many surviving fine on the state pension. His point was that many people just don’t spend very much beyond essentials, particularly after mid 70s. No idea how accurate this is.
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I think mid 70s seems a bit early if you are fit but certainly your spending should drop off. I don't buy that you need to draw down your pension fund at such a slow % rate as seems to be the received wisdom.
 
Good discussion, agree with most of what Brendan said. I would tend to agree with those who said that the state pension wouldn't leave a lot of room for those with any additional costs or who would like to be able to take holidays abroad but it's good to see the discussion to show that even a small private pension would ease some concerns there.

Sue Ellen said:
Between the inconvenience of the dreaded NCT mess over the past few years we have switched to buying new mainly for reliability. The price of the second-hand cars has increased so much too that it is another point to be borne in mind.
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Not too sure about this logic Sue. These days (compared to nuair a bhí mé óg!) cars are, in general, very very reliable. Obviously you can make a poor choice with second hand cars, not spotting some red flags, but by and large, if buying off a reputable dealer, reliability is not something I would have a concern over these days, certainly not compared to 30 odd years ago. Price I would agree, second hand cars are costing a lot more of late and there is no sign it will revert back to anything like pre Brexit.
 
time to plan said:
I think mid 70s seems a bit early if you are fit but certainly your spending should drop off. I don't buy that you need to draw down your pension fund at such a slow % rate as seems to be the received wisdom.
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I think early 80 would be more appropriate for a lot of people. My parents are in these age brackets. They are still quite active as are their surviving friends. They certainly had active 70s with at least 2 or 3 trips abroad (most of them road trips), house extensions... However my father being early 80 rhythm has started to slow down noticably, though I would consider him quite active. My mother is still working on her mid 70s, totally by choice. I am not sure how their spending has dropped. We recently discussed their food bills as they had calculated it for 2023 It was actually very high. Their explanation: many meals with friends, children and grandchildren.
 
Allowing for hopefully good health then early to mid 80s is more likely slow down time and less spending in theory, while spending on hols/socialising might reduce my experience with my father was that heating/tv costs increased. Heating obviously as at home more all day and couldn't begrudge him all the sports etc he wanted on Sky when he could no longer do gardening! All these things are very personal and won't apply to everyone obviously but must be thought about, another big expense for us was having to build on a downstairs bedroom/bathroom so if anyone doesn't have that think about it in time.

Property tax is missing from that list but rest is pretty accurate!

I know my father never had a foreign holiday after retirement (mind you they were scarce before that too) and any trips were a few days up the country to stay with his brothers when he was still driving. Never used free travel as rural living, once a week bus to nearest town all that was available so of zero use, I'd say he hadn't been on a train since his youth if ever!
 
Gordon Gekko said:
A €2m pension pot delivers pension income of around €60k a year. That’s not massively more than the average salary. There are lots of people in Ireland earning lots of money who couldn’t get by on €60k a year. Equally there are people for whom €60k would be a king’s ransom. It just depends, different strokes for different folks.

I’ve actually done my own numbers and if I was retiring today I estimate that I need €5,000 a month net of tax in today’s terms so that’s the starting point for my own planning.
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2m will give you more than that if you are not trying to preserve some or all the capital.
You could have 100k a year gross for 20 years if taking it out of cash. From 65 to 85 you could hardly spend it all and who needs a lot if you are even lucky enough to reach 85+
 
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