Key Post How much will you spend in retirement?

mct1 said:
Interesting, thanks. I see your energy bills are low compared to ours, house maintenance ditto. And you seem to have a trouble-free cat - no large vet bills. I think we spend more despite downsizing to one car and having lower cost holidays, so I should do a similar breakdown. We have expensive enough hobbies/pastimes too, isn't that what retirement is for?
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I've recently examined our energy bills because of switching over to a smart meter and bear in mind we have a house that is on the go 24 hours a day as I'm an early bird and Mrs C is a night owl and can sometimes resembled two ships passing...
I was able to finally get an average energy usage which is 18753 Kw for gas and 4292 Kw for electricity and given the rates at present I expect that cost to rise quite steeply to €2.5K for gas and €2k for electricity
I think we've been very lucky with the cats re cost my own cat passed late 2020 but last summer a neighbours cat has come to visit so we get most of the benefits but little or no costs
The cars are old an 07 and a131 both Nissans and apart form the usual stuff nothing has gone wrong but we hardly do any milage except when I go to Spain
Holidays is the biggy, we both like to and have travelled a lot over the last 20 odd years and apart from Spain they usually now are three weeks road trips in Europe and America, this year I didn't go to Spain because we're thinking of going to Japan and that's going to be expensive to put it mildly
 
For me I am aiming for €600 / week. My wife will also have a pension but when it comes to money we are independent republics. We club together for the big items and I pay for some things and she pays for others -but have separate bank accounts and do our own spending.


I think a car is a big one. I had some issues with my own car recently and I now have to reconsider my own retirement needs estimates.

I spend approx.

€70 / week on fuel = €3640 per year
€20 / week Insurance and tax = €1000
€20 / week Servicing and tyres = €1000
I would need to factor in another €1000 for repairs such as shocks / brakes/ misc.
Total = €6640

That is almost €7000 and that is not including replacement

Overall I think I will need approx. €12,000 a year for motoring costs to include replacing / upgrading the car every 4-5 years/

That's €230 / week!


By the time I retire I plan to have all the big jobs completed at the house. I also hope to have a fairly newish car that will keep me going for at least 5 years. I will have a lump sum which can be used for big spends such as a car but I would like to have a decent nest egg for any unforeseen issues so I don't plan on a big splash when the lump sum lands in the bank account.

My 2 children will still be going through college when I retire and as teenagers they are already quite adept at putting their hands out for money. I also envisage me helping them with deposits for houses in the next 10 - 15 years.

For me this means me working for 2-3 years more than I had hoped for. I am still hoping to retire in 5 years at age 58.

I was originally aiming for €500 / week to send the retirement email to my HR but I now think I need more like €600.

I have 2 friends who I go to for advice / ideas on finances

One is saying that I can live on €400 a week no problem and that I won't need much money when I retire
The other is advising me to work till I'm 60 and get as much as I can
 
As per sidzer above. Needing a car is a big cost. Living near good public transport and the facilities you need is so important. Then the car could be done away with and massive amounts of money saved.

Also I do believe that in the not so distant future many won't own a car. See options even now to hire like Gocar, yuko and also the new Toyota initiative. https://www.toyotadealer.rentals/ . Again where you live re access to them is so important.

When you consider how often you use your car V the cost it can be quite an eye opener. Ok for some it is a necessity but for others there will be good options and these will save you considerable amounts of money.
 
Harfang said:
Living near good public transport and the facilities you need is so important
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I live in Dublin between the N11 and the DART line. An easy walk to either. We also have free public transport. Close to two Dunnes Stores. two Tesco, one Lidl, two Aldi, a SuperValu and a Marks and Spencer. Yet we have two cars sitting in our driveway. I am not sure why. Maybe it is the fear that one of us will get sick so we will need the other car available, plus driver.

Our car running costs are very low. Our food costs are low. Energy bills becoming more expensive. Health Insurance becoming more expensive. We don't really spend money on ourselves, except on holidays.

I think if you have no loans when you retire and your children are looking after themselves you don't need a huge amount to live on.
 
One "expense" that dawned on me recently is the large tax bill my spouse and I will have each year. We'll have Irish and UK state pensions and UK personal pensions all paid without tax even though they are all taxable income. I imagine there will be tax of a few thousand to pay when I do the tax return each year.
 
Do you need a car every 5 years in retirement?

I am not quite over the hill on the way to retirement but this is a fascinating thread.

My natural assumption is that costs in retirement may go up due to the increased free time!
 
What you spent over the 'Covid' years should give you a basic needs figure to live on. We didn't have the dreaded temptations of holidays, drink, debauchery or eating out. I was living on 600 a month. It didn't include clothes, mortgage or health insurance though the latter two being possibly quite high for some.
 
DublinHead54 said:
Do you need a car every 5 years in retirement?

I am not quite over the hill on the way to retirement but this is a fascinating thread.

My natural assumption is that costs in retirement may go up due to the increased free time!
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I agree about the car thing.. Purchased a 3 yr old car with 37km, 10yrs later I have 330km on it with no mad repairs.. Always service as per manufacturer guidelines
 
Back in 2019, the AA suggested that the average annual cost (including depreciation) of running a family car was €10,691.

Cost of Motoring

Learn more about the cost of motoring and what some of the average costs for drivers in Ireland can be, based on tax, insurance & more.
www.theaa.ie www.theaa.ie

With the recent burst of inflation, I guess that figure would now be around €12k.

That’s a lot higher than the €7,361 figure provided for in the Standard Life calculator (which allows for a change of car every five years).

YMMV.
 
The mention of Covid was a great point - particularly during the first lockdown, we found out what our "minimum comfortable" figure was as our only discretionary spending was the supermarket and a few online purchases. As a rough rule of thumb, I'm using our spending at that time as the target for a 2% withdrawal from our pension & savings - i.e. if we need to cut back in an extreme situation, that's what we would need without having to resort to being uncomfortable/cold/hungry and our money is unlikely to run out. So in other words, our pension target is 50 times whatever we spent in the cheapest Covid year.

I've found YNAB (envelope budgeting) a great help for working out what our normal day-to-day spending is, and also budgeting for bigger expenses e.g. a car replacement every few years. The plan for a while has been to work out what our "nice comfortable" figure is and make that about a c.3.5% withdrawal from our funds - i.e. if that figure is 60,000 a year (gross), we'd need a combined pension fund of 1.7m. The "nice comfortable" is the Covid-minimum plus optional expenses like holidays, gadgets, house refurbs etc. Health insurance is not optional.

Fees on our pension really occupies me. If we've decided to withdraw 3.5% as a normal withdrawal, even a 1% fee is a massive problem. I don't think people quite appreciate how much of an impact the (what I consider to be) outrageous fees we pay in this country actually matter to your income in retirement, I will fight for every reduction of a tenth of a percent in our annual fees.
 
Kilkenny06 said:
Fees on our pension really occupies me. If we've decided to withdraw 3.5% as a normal withdrawal, even a 1% fee is a massive problem.
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Are you referring to annual management fees here?
If so then even 1% is quite high these days.
 
In our case, we put everything through the visa, so it was easy to calculate how much we spend over the course of a year. This was taken as a ball-park for our retirement living cost.
We then took our combined salary, took off the mortgage, the savings, the pension payments, and AVCs. The resultant figure was the same as what we are living on, give or take.
We then calculated how much our retirement income would be (two DB pension, with around 25 years each, if we retire at 60). This matched our current living expenses, which was very comforting.

I think it was around €30k net a year. (calcs. done around 6 months ago).

Now, I know we can live cheaper than that in retirement (possibly much cheaper), with cheaper holidays which are off-season etc.

and I know it's horses for courses, but my car was bought 8 years ago for €7000 (09 Hyundai i10). It has cost nothing in repairs other than servicing, costs €200 to tax and €300 to insure. I use around €1k a year in fuel. That's less than 2k a year all-in. Now admittedly, I only do around 8000 KMs a year. So it's not a large expense for me, and will never be. And not everyone would be seen dead in an i10, but it works for me.
 
I plan to be in a position to retire in 2030. By my reckoning myself and my spouse should be able to live comfortably then on €30k per year, excluding holidays & hobbies.
 
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