How Much Will I Need?

I’ve mentioned a few times that for my Future Fund and future retirement income, I had been loosely aiming for a ‘Moderate’ standard of living as cited by Retirement Living Standards (RLS), requiring an income of £23.3k.

For ease in my spreadsheets, that was a nice round income of £24k or £2k a month (net). Note that I currently do not need this much to live on and had already adjusted my numbers to account for the double-digit inflation we all had to swallow last year.

So you can imagine my dismay (and shock) to see that RLS had updated their numbers for 2023 and that such Moderate standard of living in retirement had apparently ballooned in just one year by 34.3% to £31,300. Erm, what!?

Source: retirementlivingstandards.org.uk

This predicament has been written about recently by Monevator, and from some of the comments against that post, it seems many believe the numbers are a little ‘frothy’.

Still, I’m sure there will be yet others looking at the higher end/Comfortable numbers and thinking that £43k (£59k for a couple) is nowhere near enough for their lifestyles but each to their own. For me, I mean, I’m not sure what I would spend £31k on, if I had it? I’d have to be frivolous and wasteful.

The numbers come from this report, where 135 people participated in discussion groups, people who were retired but also non-retired individuals over the age of 50.

Although the report makes an interesting read, I’m not sure about the views of this latter group, who I reckon will have somewhat over-estimated their costs.

Which is Which?

Which? have also done their own report on retirement spending, and I’m inclined to believe their numbers are a tad more accurate, given that their research was based on surveying over 5000 retirees on their actual spending.

Which?’s ‘middle’ standard of retirement living requires £20k, so my continued aim for an income of £24k falls within this catergory – phew!

Bills, Bills, Bills

Cost of living aint getting cheaper so all I can do is try to keep the costs within my control from spiralling upwards.

I mentioned that I recently switched my broadband for a saving of £20 a month – I could have gone cheaper but as I work mostly from home, I couldn’t really take the risk of not having fast full fibre (reliable) internet.

My mobile phone monthly was swapped recently from £11 a month to £8 – nothing huge but it all adds up.

Groceries I aim to average £40 a week – doing alternate normal and small weekly supermarket shops seems to be working. A shopping list is a must however, as it’s easy to blow this budget if I just drop things randomly in my shopping trolley, without first checking what I already have in my cupboards/freezer.

I have a credit balance on my electricity/gas account and have been notified that my direct debit will be reducing by £20 a month soon. I’ll leave whatever credit balance is left for next winter.

Water, Water, Everywhere

When I moved into my house, I got a water meter fitted as soon as I could, knowing for a fact that I would make a saving (as with my previous home).

I’ve got a water butt in the garden for my plants (also use that water for my indoor plants) and think I’m doing a decent job of not wasting or using excessive water.

Since I’ve switched to a water meter, I’ve apparently saved £753.98 (over 2 years) compared to if I’d stayed on rateable value bills.

What surprised me was my average daily usage compared to other singleton households…

So it looks like my daily average is around 40 litres, the outlier being 97 litres a day during summer 2022, which would have been due to the heatwave we had and me using the garden tap (plus watering can, to avoid using the hose) to water my parched plants.

But according to United Utilities, other single households typically use 149 litres a day – what are these people doing to use so much water?

Several baths every day/really long power showers, leaving the water running while they brush their teeth/wash the dishes, flushing the toilet needlessly/endlessly? Using the hosepipe daily to water their garden/wash their car?

I’ve never been one to stay in my PJs while working from home (except the time when I had Covid), I’m dressed every day so I shower every day. However, my showers are usually 5 minute max, (I tend to just go over the much vaunted 4 minutes)  longer if I have to wash my hair!  It’s not just about cost-cutting, it’s about not wasting resources.

I let the washing up pile up in the sink during the day and do it all in one go in the evening, water in a washing up bowl, the old fashioned way.

I do 1-2 clothes washes a week, don’t always have enough dirty clothes for a full load so have to wait sometimes!

I understand that larger households will use a lot more water but seriously can’t see how my norm is so low compared to other singletons? Not that I’m worried about it but it just seems bizarre.

The Only Way is Up

It’s likely that I will probably at some point be left with no alternative but to revise my income numbers – there’s only so much I can do to keep costs down, other costs will creep up which I will have no control over and I don’t want to change my current lifestyle too drastically.

I still think it’s unlikely that I would need £31k though.

I’ll track my spending this year to see if I’m proved wrong.

How does your intended retirement income compare to RLS/Which?

29 thoughts on “How Much Will I Need?

  1. Hey weenie, thanks for your post. I must admit I thought the same when I read that recently. Some of the things that were being included were things I certainly would never spend money on. I am also inclined to believe the which survey results a bit more as well.

    My target is also £2k a month but that does include being mortgage free. I’m already spending that amount now and I don’t feel restricted in the slightest. I think if I find I am living well on that much for many years in a row now (adjusting for inflation) then that’s all the evidence I need that it should be enough later. I don’t envision huge changes to my outgoings should I stop work that would change that

    TFJ

    • Hi TFJ
      By my own mental accounting/checking my bank accounts, I’m living on less than £2k a month.

      However, I’ve never tracked my spending so I’m going to do so for 2024 to see how right or wrong I am! Let’s hope I’m not too wrong!

      • Yeah that sounds cool. I track to the penny and have for years so I have good confidence in my numbers. The only thing is that I could possibly start to spend more but I will see over the next 10 years.

        TFJ

  2. I think what I’d say Weenie is that the more you track your spending before retirement – and try to be really honest about all the costs you incur over a year – the better it will be. Years before retiring I was shocked when I realised that I was kidding myself on how much I was actually spending if I included the actual costs of ALL holidays, of eating out, weekend breaks, house repairs, car repairs and so on. I was under-budgeting by about 20% versus what I was really spending over a year. I was still working then, so I made the relevant adjustments – grudgingly – and made my retirement plan from there. Glad I did!

    • Hi Jim

      Yes, I knew I would have to do detailed tracking of my spending at some point so will make a start now. I have a fair idea of my spending but acknowledge that it’s possible that I’ve missed something (quite obvious) and tracking it all will reveal everything. I hope I haven’t been kidding myself about my expenses and been massively underbudgeting!

  3. Yes, I was similarly shocked when I saw that the figured had risen by £8k (some 34%). But I’ve tracked my expenditure, in broad terms, for years so I’m confident that £20-£25k per year will allow me to all that I wish.

    I’m impressed by your water consumption. Mine was 85 litres per day, per my last bill in September. The biggest wastage is because I have to run the kitchen tap for a minute before the water becomes hot – at least in the summer I’ve learned to fill a watering can with this but wastage is still annoying. Think the rest goes mostly goes on toilet flushing!

    On the plus side, I recall that last year (?) Ermine was discussing electricity usage on his blog. You declared at around 100 kWh per month – which was lower than anyone else’s in the comments – but mine only just about nudges up to 70kWh per month. 😉

    NB did you do a financial model per my comment last month (December Savings)? If you did, did the result surprise you?

    • Hey Curlew

      Yes, I will track my expenses over the next 24 months to see what exactly I’m spending on.

      Nice going on the 70kWh a month, I think I’m still at the 100 kWh range. I too have to run my kitchen tap a short while before the water gets hot – that cold water goes into another bowl I put to one side, which I then use to rinse the dishes I’ve washed, think that helps a little.

      I started the financial model and while it began quite straightforward, it got complicated as I looked further into drawdown. I think I will do a drawdown plan update but it won’t be finalised until I can drill down to how I will get the money from my various SIPPs, ISAs, DC pension, DB pension and state pension. So still on the to-do list!

  4. Don’t forget that as well as an income flow you’ll need to have some capital available. (We’ve just replaced our roof: £40k!)

    Or, I suppose, you could look on future Equity Release as pseudo-capital.

    • Hi dearieme

      £40k – ouch! I’m not sure I will have that much spare but the intention is to have some cash/capital to cover large expenses but also sequence of returns risk, if I don’t want to sell stocks in a downturn.

      Not really considering equity release at the moment, not while am still paying off the mortgage.

  5. Would agree with the other commenters, if you do full expense tracking then these sorts of articles are an irrelevance as you already know what you spend, you don’t need someone else to give you an inaccurate estimate. When I say ‘full’ I just mean track every single transaction, don’t miss or overlook any costs. Its way easier to do now that cash isn’t really a thing as you can just download the data every month.
    I try and streamline the process, latest is utilising moneyhub to aggregate and categorise transactions from different accounts. Then a bespoke sheet to sum across categories. I’d say expense tracking down to about 15 mins a month. Its largely automated away now..

    • Hi Rhino

      I haven’t done a full penny by penny tracking of my expenses since I paid off my debts, so doing so doesn’t give me any positive vibes, just bad memories. But I will do this as it needs to be done and I hope there aren’t too many shocks!

      It’s going to be really manual to start off I think, but hopefully will get easier!

  6. I don’t track my spending too meticulously, and I’m not sure how relevant these surveys of a small sample of the general population are when applied to those in the FIRE community, so i treat all the £ figures with a pinch of salt, however what does make more sense to me is the year on year 34.3% increase in required income. Mortgage rates, food, utilities, and insurance are all up significantly, and whilst it’s difficult for me to do a direct comparison i do get the impression that my own % increase isn’t too far away from this horrible figure.
    Thankfully though i’m a lot closer to fat FIRE than lean so i have a big buffer built in, and apart from tutting “how much!” every time i glance at the price of milk in the Co-op i’ve not been adversely impacted like some have, nor been forced into making any difficult decisions. For me it was quite important to build in a safety net and right now that’s doing its job admirably.
    Looking at the current situation positively, i think it’s actually been a good reality check for a few people, as there would undoubtedly have been one or two out there who were envisaging inflation and interest rates continuing to bump along the bottom of the graph for the rest of their days, and that a 4% withdrawal rate was safe.
    I’m a bit late on this comment but very glad to hear that January turned out well for you.
    PS – we’re only talking pennies here, but Asda do a £5 per month phone deal via Vodafone (3gb data) – i’ve been with them for a year and they’ve been good, so that might be something to look at when you next renew. Of more concern, if you like chocolate it might be worth stockpiling up some of your favourite bars now, as the price of cocoa futures has gone through the roof due to the poor harvests this season, so it’s possible that there could be a supply shortage in the shops at some stage. I might have to up that 34.3% figure!!

    • Hear what you’re saying KC – though with one research saying it’s £31k and the other saying £20k, the middle is around £25.5k so might be closer to that, although it’s all personal to the individual of course so could vary greatly still.

      All my bills went up but only my mortgage went up significantly – only by documenting all my expenses will I see if I’ve missed something.

      The safety net (of cash) is what I need to build up, hold very little cash in my Future Fund at present.

      For my mobile, I did look at cheaper deals like the ones you mention but my data usage varies between 3gb and 6gb, so I have to have something which covers that. Will of course check out what deals are available when the time comes round again.

      Chocolate shortage is fine by me, being more of a savoury lover but I might buy an extra Easter Egg (if the price is right haha).

  7. Here is another saving tip that you did not ask for: arrange for your energy bill to be paid monthly based on usage in that month, rather than building up credit.

    Unless your energy company pays interest on that credit then you are lending them money for free. There is an argument that this kind of enforced saving plan is a benefit for those that can’t manage their money, but I don’t think that applies to you.

    • Hi G
      Hear what you’re saying and while it does make sense, paying by DD and building up a small credit balance works for me. I keep tabs on it so that it doesn’t get too big so not really losing much in terms of interest.

    • I agree with this; a variable direct debit is no more bother than a standard DD, and it really does show how much usage is per month, so not only are there no nasty shocks when the DD is renewed but it’s a useful reminder to keep any eye on energy usage particularly in the winter.

  8. I too was a little sceptical about these figures especially some of assumptions if you download the underlying Excel sheets. The Which? analysis looks more believable.
    Having said that I would strongly advise to track all expenditure. I have done this for the past 15 years. What used to be a pain has almost become enjoyable! It means that I know precisely how much I need to live now and how much in retirement. What I fear is that there’s not going to be much of a change given that I mostly work from home (no commuting or buying work clothes), I’ve paid off the mortgage and I’m more likely going to go more places once retired.

  9. I laughed when I saw those retirement figures in the news. It just seems to be a number picked out at random. I could easily, and comfortably, live on less than £31k. I could do it without impacting my lifestyle on about £22k. Crazy figures.

  10. Great topic. I’ve constantly got the calculator out for this one! I honestly think these retirement figures are deliberately OTT to “scare” people into saving more for their retirement. That’s not a bad thing if people can afford it, but really disheartening for people that can’t, or aren’t as financially enlightened.

    Yes, I think around 2k cash (after tax) is a reasonable figure. Yes, we’d all like more, but then it’s about pulling the trigger on work when you’re young enough to enjoy the money. It’s about finding that sweet spot. I track my expenses to the penny every month and currently spend about £2400, but that includes an £800 mortgage that I won’t have in 4 years. So £2000 is realistic, but I will want to and be able to travel more .

    Roughly speaking my retirement finances would look like this;

    £700 – essential/bills (council tax, utilities, phone, dental insurance, charities etc, (£100pm to annual car costs), basically all the bills I won’t or cant compromise on.

    £200 – this is a divided by 12, re-occurring costs account for hair appts, wellbeing, hobby money, birthdays, Christmas etc

    £200 – ok this is a curveball I could do without, and cuts right into my travel fund, but I’m allocating £200pm to private healthcare. I can’t see a doctor where I live and I rely on private through work. I have no idea how realistic this figure is, but it needs to be included,

    £900 – this is discretionary spending, food, petrol, clothes, travel the lot.

    That’s my 2k. I’m far from loaded, but it seems fairly reasonable.

    • Hey Starla

      Thanks for sharing how your finances would look. I hadn’t thought about allocating separately for healthcare, I had been thinking it would be part of my emergency fund but I guess putting aside specific funds makes sense.

      Two months into my tracking and I can already see that I spend more than I thought I did – not a whole lot more but probably enough to make a difference! Will see how it all looks after a year of tracking.

      I’ll be saddled with my mortgage until I’m at least 65 but I have accounted for it in my spending.

      I have very little cash right now and do need to build that up, to cover for sequence of returns but also as you mention, for house repairs, car replacement etc. I’m not going to be able to build or accumulate a large amount so no goal at the moment – something I need to chew on I think.

      Cheers as always for the insights and ideas!

  11. Meant to add to the above, I’m aiming to save a “cash fund” of around 70k ish (not inheritance reliant) for house repairs, replace my car etc. It’s probably not enough if I have a good innings but I’ll deal with that when I get there! Move, downsize, blah.

  12. Your water consumption is great and I fear that ours (if metered) would be much higher.
    As it is, I’m more concerned about the cost of heating the water we use, only to pour it down the drain.
    This includes the Lady who likes to brush her teeth with the hot tap pouring.

  13. The RLS standards are done by an association of pension companies, so it’s in their interest to inflate things! My DH and I have earn about the middle income between us and we still manage to go on two long-haul 14-day holidays a year. How someone on that pension can only afford a European holiday and a couple of short breaks is beyond me; they must be staying in far swankier places than we do!

    • Hi Tina
      Interesting, and yes, can see why the RLS would inflate the numbers! Seems like those people aren’t as good as you and your other half in finding good holiday deals, or yes, they’re staying in swankier places!

  14. Great post! When I saw this on the news I couldn’t relate to experiences and I felt that, as a frugal FIREonaut – with ‘The Knowledge’, I would be very fine on much lower that what was being proposed as the minimum. Thanks for the Which? info. This seems much more realistic and better researched.

    Interesting discussion under the line though. And it’s made me wonder that my calculation of not including holiday spending, as I feel these are optional and tailorable to financial position, could be something for me to reconsider. There’s always the option to do casual work to top things up if necessary.

    I’ve actually been running well below my FF minimum for about a year or so now so feel quite confident that I’ll be fine with my skinny FIRE plan.

    • Cheers ChromeBaby
      I think my discretionary spending needs looking at, I can’t say I really keep tabs on my holiday spending either, amongst other things! I intend to try to track it all this year to see what it all looks like and hope I’m not in for too much of a shock!

  15. If one likes gourmet food then one will spend way more than £40 a week and if one drinks decent whisky & wine then ones annual alcohol bill is a 4 figure sum.
    Maybe upgrade what you consume for a temporary period and see if you are happier or not.

    • Hi Simon
      I can imagine the expensive spend for someone into gourmet food but I’m not that kind of person – despite having tried lots of great cuisines, my home tastes are quite simple and on the cooking front, my parents’ expertise didn’t pass onto me, lol! On the booze front, I only drink craft beer at home (sometimes the non-alcoholic versions) and tend to buy them when there are on offer. Only drinking at weekends saves on the costs too.

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