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Old December 2nd 17, 07:04 PM posted to uk.finance
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Default Retirement options?

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (£4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?




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Old December 3rd 17, 03:51 PM posted to uk.finance
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Posts: 7
Default Retirement options?

On Sunday, 3 December 2017 00:19:17 UTC, Yellow wrote:
On Sat, 2 Dec 2017 11:04:36 -0800 (PST),
wrote:

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (£4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?


Depends on how much they need to live on.

So, say he has 94K and that has to last for 13 years and let's say he
gets an average interest of 1.5%. That would mean he can spend around
£8,500 a year plus his £5,000 pension.

Can he and his wife live on that?

Bear in mind that does not allow for any increase in spending for
inflation but he might be able to get a better average interest rate
than that, depending on how much be puts in short term savings and how
much in longer term accounts.


Thanks both for the input.

From what he tells me, their outgoings in terms of council tax, gas, electricity etc etc (i.e the non-avoidable outgoings) are £390 per month (less in Feb/Mar as no council tax is payable in those months).

On top of that, it's the weekly shop plus however much it costs them to run a Fiesta diesel for a year.

I suspect what he's forgetting to factor into his sums are unavoidable one-off hits to his savings (the fences all blow down and it costs £500 to replace, for example).
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Old December 3rd 17, 05:44 PM posted to uk.finance
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First recorded activity by FinanceBanter: Feb 2009
Posts: 50
Default Retirement options?

On Sun, 3 Dec 2017 07:51:33 -0800 (PST), wrote:

On Sunday, 3 December 2017 00:19:17 UTC, Yellow wrote:
On Sat, 2 Dec 2017 11:04:36 -0800 (PST),

wrote:

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (£4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?


Depends on how much they need to live on.

So, say he has 94K and that has to last for 13 years and let's say he
gets an average interest of 1.5%. That would mean he can spend around
£8,500 a year plus his £5,000 pension.

Can he and his wife live on that?

Bear in mind that does not allow for any increase in spending for
inflation but he might be able to get a better average interest rate
than that, depending on how much be puts in short term savings and how
much in longer term accounts.


Thanks both for the input.

From what he tells me, their outgoings in terms of council tax, gas, electricity etc etc (i.e the non-avoidable outgoings) are £390 per month (less in Feb/Mar as no council tax is payable in those months).

On top of that, it's the weekly shop plus however much it costs them to run a Fiesta diesel for a year.

I suspect what he's forgetting to factor into his sums are unavoidable one-off hits to his savings (the fences all blow down and it costs £500 to replace, for example).


Or he needs a replacement car, for example.

I haven't done the calculations myself but he really should do,
allowing a tidy sum for contingencies.

--
<insert witty sig here


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Old December 3rd 17, 06:55 PM posted to uk.finance
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First recorded activity by FinanceBanter: Jan 2017
Posts: 5
Default Retirement options?

On Sun, 03 Dec 2017 17:44:23 +0000, Mark
wrote:

On Sun, 3 Dec 2017 07:51:33 -0800 (PST), wrote:

On Sunday, 3 December 2017 00:19:17 UTC, Yellow wrote:
On Sat, 2 Dec 2017 11:04:36 -0800 (PST),

wrote:

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?

Depends on how much they need to live on.

So, say he has 94K and that has to last for 13 years and let's say he
gets an average interest of 1.5%. That would mean he can spend around
8,500 a year plus his 5,000 pension.

Can he and his wife live on that?

Bear in mind that does not allow for any increase in spending for
inflation but he might be able to get a better average interest rate
than that, depending on how much be puts in short term savings and how
much in longer term accounts.


Thanks both for the input.

From what he tells me, their outgoings in terms of council tax, gas, electricity etc etc (i.e the non-avoidable outgoings) are 390 per month (less in Feb/Mar as no council tax is payable in those months).

On top of that, it's the weekly shop plus however much it costs them to run a Fiesta diesel for a year.

I suspect what he's forgetting to factor into his sums are unavoidable one-off hits to his savings (the fences all blow down and it costs 500 to replace, for example).


Or he needs a replacement car, for example.

I haven't done the calculations myself but he really should do,
allowing a tidy sum for contingencies.


It is a fairly easy spreadsheet to set up and I have one for myself
which is how I could work out the figures for the OP reasonably quickly.

I stopped working is similar circumstances, although my redundancy was
not optional, a year and a half ago and hoped I too could afford to stop
work completely. So I approached it by really pulling my horns in for
year one and wrote down every single penny that went out and came in and
from that I could see my minimum base expenditure.

And that have allowed me to see how much contingency I have in the pot
for luxuries and one-off expenditure etc.

I still write down every penny as of course I now have a fairly strict
budget, and that little bit of discipline allows you to keep a eye on
things. My spreadsheet also handles inflation on my spending and
interest on my savings, so I can see how the cash is holding out.


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Old December 4th 17, 12:48 PM posted to uk.finance
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First recorded activity by FinanceBanter: Apr 2005
Posts: 121
Default Retirement options?

On Sun, 3 Dec 2017 18:55:01 -0000, Yellow
wrote:

On Sun, 03 Dec 2017 17:44:23 +0000, Mark
wrote:

On Sun, 3 Dec 2017 07:51:33 -0800 (PST), wrote:

On Sunday, 3 December 2017 00:19:17 UTC, Yellow wrote:
On Sat, 2 Dec 2017 11:04:36 -0800 (PST),

wrote:

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?

Depends on how much they need to live on.

So, say he has 94K and that has to last for 13 years and let's say he
gets an average interest of 1.5%. That would mean he can spend around
8,500 a year plus his 5,000 pension.

Can he and his wife live on that?

Bear in mind that does not allow for any increase in spending for
inflation but he might be able to get a better average interest rate
than that, depending on how much be puts in short term savings and how
much in longer term accounts.

Thanks both for the input.

From what he tells me, their outgoings in terms of council tax, gas, electricity etc etc (i.e the non-avoidable outgoings) are 390 per month (less in Feb/Mar as no council tax is payable in those months).

On top of that, it's the weekly shop plus however much it costs them to run a Fiesta diesel for a year.

I suspect what he's forgetting to factor into his sums are unavoidable one-off hits to his savings (the fences all blow down and it costs 500 to replace, for example).


Or he needs a replacement car, for example.

I haven't done the calculations myself but he really should do,
allowing a tidy sum for contingencies.


It is a fairly easy spreadsheet to set up and I have one for myself
which is how I could work out the figures for the OP reasonably quickly.

I stopped working is similar circumstances, although my redundancy was
not optional, a year and a half ago and hoped I too could afford to stop
work completely. So I approached it by really pulling my horns in for
year one and wrote down every single penny that went out and came in and
from that I could see my minimum base expenditure.

And that have allowed me to see how much contingency I have in the pot
for luxuries and one-off expenditure etc.

I still write down every penny as of course I now have a fairly strict
budget, and that little bit of discipline allows you to keep a eye on
things. My spreadsheet also handles inflation on my spending and
interest on my savings, so I can see how the cash is holding out.



Yes similarly, in fact it is a 20yr spreadsheet as a fair amount of my
OAP requirements come from money invested. Two factors, one for
inflation, one for investment growth. Allowances for capital
purchases every couple of years (car, washing m/c etc). Has worked
well for the past 20yrs though I'm now toying with bringing it down to
10yrs - that's the main issue for me, should I spend it all today as I
might die tomorrow or do I have another 20yrs left in me?


--
AnthonyL
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Old December 4th 17, 09:05 PM posted to uk.finance
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First recorded activity by FinanceBanter: Jan 2017
Posts: 5
Default Retirement options?

On Mon, 04 Dec 2017 12:48:28 GMT, AnthonyL
wrote:

On Sun, 3 Dec 2017 18:55:01 -0000, Yellow
wrote:

On Sun, 03 Dec 2017 17:44:23 +0000, Mark
wrote:

On Sun, 3 Dec 2017 07:51:33 -0800 (PST), wrote:

On Sunday, 3 December 2017 00:19:17 UTC, Yellow wrote:
On Sat, 2 Dec 2017 11:04:36 -0800 (PST),

wrote:

Posting on behalf of a (real) friend.

He is 54, has 90k in savings, no mortgage, no kids and a pension from his previous employer of around 5k a year.

He reckons he could take redundancy from his current employer (4k), "retire" and live off of the savings and pension until he hits 67 when he can start drawing the State Pension.

He says he and his wife will cheerfully cut back on non-essentials (second car, for example) and it'll work.

If the going gets tough between now and 2030 he says he'll go and sit on the checkouts at B&Q a couple of afternoons a week.

Sounds a great end to a working life but I've told him it isn't going to work......except, I can't quite quantify *why* it won't work.

Any thoughts?

Depends on how much they need to live on.

So, say he has 94K and that has to last for 13 years and let's say he
gets an average interest of 1.5%. That would mean he can spend around
8,500 a year plus his 5,000 pension.

Can he and his wife live on that?

Bear in mind that does not allow for any increase in spending for
inflation but he might be able to get a better average interest rate
than that, depending on how much be puts in short term savings and how
much in longer term accounts.

Thanks both for the input.

From what he tells me, their outgoings in terms of council tax, gas, electricity etc etc (i.e the non-avoidable outgoings) are 390 per month (less in Feb/Mar as no council tax is payable in those months).

On top of that, it's the weekly shop plus however much it costs them to run a Fiesta diesel for a year.

I suspect what he's forgetting to factor into his sums are unavoidable one-off hits to his savings (the fences all blow down and it costs 500 to replace, for example).

Or he needs a replacement car, for example.

I haven't done the calculations myself but he really should do,
allowing a tidy sum for contingencies.


It is a fairly easy spreadsheet to set up and I have one for myself
which is how I could work out the figures for the OP reasonably quickly.

I stopped working is similar circumstances, although my redundancy was
not optional, a year and a half ago and hoped I too could afford to stop
work completely. So I approached it by really pulling my horns in for
year one and wrote down every single penny that went out and came in and
from that I could see my minimum base expenditure.

And that have allowed me to see how much contingency I have in the pot
for luxuries and one-off expenditure etc.

I still write down every penny as of course I now have a fairly strict
budget, and that little bit of discipline allows you to keep a eye on
things. My spreadsheet also handles inflation on my spending and
interest on my savings, so I can see how the cash is holding out.



Yes similarly, in fact it is a 20yr spreadsheet as a fair amount of my
OAP requirements come from money invested. Two factors, one for
inflation, one for investment growth. Allowances for capital
purchases every couple of years (car, washing m/c etc). Has worked
well for the past 20yrs though I'm now toying with bringing it down to
10yrs - that's the main issue for me, should I spend it all today as I
might die tomorrow or do I have another 20yrs left in me?


That in part depends on who you have to leave money too and if you happy
to leave some to them. If you are childless for example, there is a
bigger incentive to get it spent where as if you have kids, most will be
happy for leftovers to head in that direction.
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Old December 7th 17, 05:46 PM posted to uk.finance
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First recorded activity by FinanceBanter: Feb 2017
Posts: 7
Default Retirement options?

Thanks all for the advice, I will pass it on and advise him to pump the numbers into a spreadsheet.

He now tells me his 90k is sat solely in Premium Bonds (in his and wife's names, not sure if good or bad but he reckons he raked in 6 x £25 wins in December).

I'm still pushing the "what happens when your car fails its MOT five years down the line and you have to spend £5k on a new one" but he seems convinced it's all rosy with his pension and savings.

I can but try......
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