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
Key Post Some wealthy people are worrying unnecessarily about their finances.
- Thread starter Brendan Burgess
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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.
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.
Gordon Gekko
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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.
Silversurfer
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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.
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 |
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.
Ceist Beag
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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.
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.
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!
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!
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+
That's interesting, where did you find that statistic for national median salary? By my calculations from your figure that would be 25,000 euros? You often hear the average industrial wage quoted which is of the order of 44,000 euros. Obviously the national median salary is alot more meaningful statistic than available industrial wage as it is not distorted by a few very high income earners at the top . However it seems to be a difficult statistic to get hold of, I think your figure would be a bit low?
time to plan
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Exactly. And after 20 years, it is likely that there will have been some fund growth so you are not left with zero pot. Of course, you have to factor inflation into this.
From the Standard Life website
How Much Money Do I Need to Retire? | Standard Life
Estimate the retirement income you may need with our retirement calculator. Plan ahead and discover how much money could support your lifestyle in retirement.
www.standardlife.ie
How do we work out the basic cost of living amount?
We've based our calculations on the 2021 Survey on Income and Living Conditions (SILC) from Ireland's Central Statistics Office. It identifies the 'risk of poverty' threshold as 60% of the national median income, or €15,158.It would be interesting to see some graphs of ARF performance vs withdrawal rates over a prolonged period of time.
e.g. how much does investment performance offset the distributions from the ARF
I'm sure there must be plenty of people who retired a decade ago whose ARFs are now worth more than when they retired?
e.g. how much does investment performance offset the distributions from the ARF
I'm sure there must be plenty of people who retired a decade ago whose ARFs are now worth more than when they retired?
Shakespeare
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Hi Gordon
Interested in your calculations as I'd be looking at something similar as required. There is such varying info out there - if you want to feel much better (but I am dubious about the genuine feasibility of this), the pension store website suggests that Eur2m pension pot would get you Eur7k per month (I haven't a hope of having Eur2m, probably not even Eur1m the way things are shaping up but it's interesting to see how different it is to the figure of Eur60k per annum from Eur2m - is that Eur60k gross, or net?).
The suggestion there is that Eur1.2m will get you Eur5k per month??
With such varying figures around, no wonder people feel fearful of what the future may bring financially (unless your PS of course!)
https://www.thepensionstore.ie/how-much-do-i-need-in-a-pension-to-retire-comfortably/
2 million pot; take 25% off for Tax free (somewhat) lump sum.
Leaves 1.5m
Using the 4% rule, that's 60k p.a.
So get rid of the car and health insurance and you have 4k for holidays a year. Also good for your blood pressure to walk rather than drive
AAAContributor
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My understanding is that the 4% rule is based on a portfolio invested in stocks and bonds.
It was trying to solve for:
- What % of the starting portfolio balance,
- can an investor spend (increasing by inflation),
- for at least 30 years,
- with a very high probability of success (100% I think, or maybe slightly lower),
- from a stock/bond portfolio (I think it was 60/40),
- based on historic US data of returns from stocks and intermediate term bonds,
- given the worst period of returns.
4% was the result.
AAAContributor
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I would agree. It's really just a starting point to provide a frame of reference. There were periods when much higher withdrawal rates succeeded, though forecasting that is impossible.
As for flexibility and dealing with the potential for underspending (and living less large than you could), there are alternatives to the rigid 4% rule like guardrail strategies.
Good article here: https://www.morningstar.com/retirement/best-flexible-strategies-retirement-income
Gordon Gekko
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Life expectancy for people in the 30-50 range must surely he higher, plus the level of exercise people undertake and better more proactive healthcare.