Key Post How much will you spend in retirement?

[Cervelo]

I'm sure I'm not alone when I say that I've had a fair few "wow" moments in my life, one of those was when my father dropped the nominal ledger in front of me and said "it's now time for you to learn how we really make money" and from that day in the early nineties I've been a numbers person
Since then I've been tracking my spending habits in one form or another to get and keep them under control, it started with the auditors paper spreadsheets and then progressed to excel in 2005, so I now have a fairly accurate tracking of all my spending for the last 18 years

The question was asked how much income do you need in retirement and while I can't tell you personally how much gross income you would need I can say truthfully what it has cost me "net" to live, in what I would class as a fairly good lifestyle for, as I've said above, a couple with no kids living in a standard 3 bed semi detached dormer bungalow with 2 cars and a cat

I'm breaking it down into two figures an essential figure which includes all food shopping including takeaways, all utilities, all socializing, meals out and cinema, all house expenditure, painting, repairs, kitchen appliances, TV's, Laptops, all the running costs for 2 cars but not the cost of buying the cars, all medical bills including health insurance and lastly the clothes we wear
The next figure is the non essential figure which includes all holidays, digital media like CD's DVD'S and PS games, my cycling addiction, any cars we've bought and lastly what I've spent on the lotto over the last 18 years which was an eye opener

So for us over the last 18 years we've averaged €19572 on essential spending and another €18912 on the non essential

In conclusion I'd say a single person on only the state pension would find it hard but not impossible to make ends meet but a couple who are both entitled to the state pension could and should be able to have a relatively good lifestyle in retirement but if they also had a private pension of a few hundred thousand well then within reason they should be able to have a great retirement lifestyle

 

[JimmyB99]

Hi Gordon

How are ARFs treated and is there a minimum income requirement?

 

[Bluefin]

0% on dividends and 10% on pension for 10 years, plus 28% on capital gains.

On average, 139 days in Ireland.

Hi Gordon

How feasible do you think it is for a couple to move to Portugal with these levels of taxation in addition to the cheaper cost of living versus maintaining a home in Ireland and having to rent an apartment in Portugal?

Wouldn't the cost of renting in Portugal not just equate to the tax that would be paid in Ireland for a couple on 50k per year?

 

[Gordon Gekko]

Yes, clearly as incomes fall, the benefit disappears.

A retired couple on €50k a year would pay very little tax in Ireland.

 

[LondonIrish]

So the guts of €40k per annum post-tax? Thank you very

Hi Gordon

How feasible do you think it is for a couple to move to Portugal with these levels of taxation in addition to the cheaper cost of living versus maintaining a home in Ireland and having to rent an apartment in Portugal?

Wouldn't the cost of renting in Portugal not just equate to the tax that would be paid in Ireland for a couple on 50k per year

To avail of the low tax on retirement income in Portugal you would have to spend the majority of the year there so I guess it would make sense to sell up in Ireland and buy in Portugal. If you have cash left over then you could also buy a bolt-hole in Ireland too.

 

[dem_syhp]

In conclusion I'd say a single person on only the state pension would find it hard but not impossible to make ends meet but a couple who are both entitled to the state pension could and should be able to have a relatively good lifestyle in retirement but if they also had a private pension of a few hundred thousand well then within reason they should be able to have a great retirement lifestyle

I think this is important, reviewing your plans if/when one of you dies. One person typically dies before the other, this may leave the surviving partner on their own for 1 year, but equally this could be for 30 years. This also needs to be considered if you're on a defined benefit pension - how will the surviving person do financially.

I'd add on to this, that its important that both partners know how to 'do everything'. Both need to know where the house hold finances are, both need to be able to cook, at least at a basic level. I'd like to assume that this is more of a problem with older generations, but it should be considered. The surviving partner will have enough to contend with without trying to figure out basic household affairs. Particularly if someone dies young, there isn't always time to 'get your affairs in order'.

 

[Odea]

We have booked holidays abroad for March, April, May, June, September and October. I reckon about €6k will be spent on these DIY efforts.

The above was for 2023.

We had some great holidays. Mostly with Ryanair. Most of the flights were "delayed". By booking hotels early and joining the hotels loyalty programme we got some decent discounts. We were unfortunate to get Covid during our May holiday, not too bad for me but worse for my wife.

We are now facing in to 2024 and have booked holidays for March, April and May. Unfortunately we have been caught in one of Ryanair's Bait & Switch flights, causing an upset to our April holiday. We would normally have booked for September and October by now but are afraid to book too far out with Ryanair in case they change their schedules again. I notice that the cost of hotels and flights have increased hugely in price so I expect to spend about €2k more this year. Thankfully I can afford it......but I notice that this years holidays will be spent in lesser known locations rather than the more popular tourist locations......better value.

We are looking to do less work in the garden this year. Most of the heavy work was done last year.

I realise that we spend more time in our immediate neighbourhood than travelling far, as a result we only do short journeys in our car. Unfortunately the NCT boys will still insist that my car tyres need replacement because of age, even though they look brand new. My NCT was due in January, I cannot get my car tested until July. Yet I still got a letter from the NCT saying that I should not be driving my car without an in-date NCT test.

Both the AIB and Permanent TSB messed up my accounts last year. Both paid me compensation as a result. I find that the harder I try to keep things simple the more difficult and complicated it is getting to do stuff.

Lots of TV shows and series kept us entertained over the winter. We are now looking forward to ditching these and getting back out and about. Hibernation is coming to an end.

First world problems.

As long as we stay healthy and our families can stay healthy we are happy.

 

[The Ghoul]

@Odea the NCTS doesn't insist on changing tyres solely because are too old. Or at least it didn't in November 2023 when I last brought a car for its NCT. I did get 4 advisories for tyres being more than 6 years old (they are actually 15+ years old) but advisories require no action.

In general, people cost themselves a lot of money by not being well up on cars and motoring. The suggestion in the calculator linked to in this thread that a car needs changing every 5 years is nonsense. It's even more nonsensical if someone is doing below average mileage in retirement.

A basic new car such as a Dacia Sandero should last 15-20 years. Mechanical items in a modern car should last a long time if looked after. When the car starts to rust structurally which it eventually will, then it may be time to say goodbye but that should take a long time in a modern car, At least 10 years and probably 15-20+.

IMO everyone should try to become well up on cars and motoring and develop basic skills to maintain them well before retirement. Even if someone becomes physically incapable of working on their car, being knowledgeable is a great help when dealing with the NCT and mechanics, picking a good mechanic etc.

 

[Persius]

And re-check the NTC website. When I first checked in early January, the first available date was in June. When I checked again a few days later, I got a date in mid February. Also, you can ring them to get an earlier date if your NCT has expired.

 

[Curtley-Óg]

Thanks to all on this thread, very useful.

I am 20 years from retiring and want to understand my actual net pension income, to check against the spending figures in this thread.
I have a statement of reasonable projection from my pension provider, discounted to current value assuming 3% inflation.
Tax is not accounted for in the projection, nor is state pension - both probably reasonable omissions but obviously needing corrected for.

These are my steps to arrive at a net income during retirement. I'd appreciate any feedback on these steps and assumptions.
1. Assume 2% annual increase to state pension over next 20 years (to 2044). Eur 14400 -> Eur 21398
2. Assume standard rate cut off increases 2% annually over next 20 years. Eur 42000 -> Eur 62410
3. Adjust 2044 standard rate cut off by assumed 2044 state pension, i.e., Eur 62410 - Eur 21398 = Eur 41012
4. Assume 2% annual increase to tax credits (after adjusting for state pension). In my case I have single person credit and employee credit, ie. Eur 3750 - 2880 (14400*20%) = 870 -> Eur 1293
5. Calculate 20% and 40% income tax on ( SRP occupational pension + assumed 2044 state pension ), assume 2% USC, deduct assumed 2044 tax credit. This gives 2044 net income.
6. Discount 2044 net to 2024 net value by assuming 3% inflation, ie. reduce by factor of 1.8

 

[Curtley-Óg]

Separately, this Which? magazine article gives a range of "essential", "comfortable" and "luxury" retirement income targets for single and couples.

https://www.which.co.uk/money/pensi...how-much-will-you-need-to-retire-aNmlv7V7sVe9

 

[Monbretia]

@Odea re the NCT if you register for the cancellation or priority, not sure what it's called but it's on the website and you are available without many restrictions you will probably get a date within a week or two. I did same last year, put in no restrictions on availabilty of day/time and had a spot within a week.

 

[holidayqueen]

I'm sure I'm not alone when I say that I've had a fair few "wow" moments in my life, one of those was when my father dropped the nominal ledger in front of me and said "it's now time for you to learn how we really make money" and from that day in the early nineties I've been a numbers person
Since then I've been tracking my spending habits in one form or another to get and keep them under control, it started with the auditors paper spreadsheets and then progressed to excel in 2005, so I now have a fairly accurate tracking of all my spending for the last 18 years

The question was asked how much income do you need in retirement and while I can't tell you personally how much gross income you would need I can say truthfully what it has cost me "net" to live, in what I would class as a fairly good lifestyle for, as I've said above, a couple with no kids living in a standard 3 bed semi detached dormer bungalow with 2 cars and a cat

I'm breaking it down into two figures an essential figure which includes all food shopping including takeaways, all utilities, all socializing, meals out and cinema, all house expenditure, painting, repairs, kitchen appliances, TV's, Laptops, all the running costs for 2 cars but not the cost of buying the cars, all medical bills including health insurance and lastly the clothes we wear
The next figure is the non essential figure which includes all holidays, digital media like CD's DVD'S and PS games, my cycling addiction, any cars we've bought and lastly what I've spent on the lotto over the last 18 years which was an eye opener

So for us over the last 18 years we've averaged €19572 on essential spending and another €18912 on the non essential

In conclusion I'd say a single person on only the state pension would find it hard but not impossible to make ends meet but a couple who are both entitled to the state pension could and should be able to have a relatively good lifestyle in retirement but if they also had a private pension of a few hundred thousand well then within reason they should be able to have a great retirement lifestyle

Just a couple of things re my post

That is just a snap shot of eleven years, the middle 2017 and the two bookends, it hides the sometime expected and unexpected expenses
Like the House insurance & maintenance in 2021, Mrs C informed me she was tired of the "derelict" look so the house was painted €5K
2020 my walk in shower needed fixing €1k and both my oven and microwave oven packed in €950 and another €1k spent on electrical repairs
2018 both my TV and laptop went down so €2k for the TV and €1300 for the laptop

While my essential expenses stayed relatively the same over the last eleven years I fully expect there to be some big changes over the next few years like our food shopping will move upwards from €80ish to around the €100pw mark,
I just got my gas and electricity bill in there and had a little mini heart attack where normally this gas bill is in and around the €350 mark, €874
With the electricity bill been around the same thanks to the Government credit

So it will be interesting to see how the next five years will compare to the last

I’m very impressed with your ESB costs. We also live in a 4 bed but do have kids who return from time to time but my esb is 3 times yours. Most of the other costs are similar and your all things bike are replaced by all things golf.
We have 4 -5 holidays a year all DIY no loans or mortgages. One old car and one fairly new car which we hope to have for 10-12 years. It is possible to have a fairly good lifestyle at retirement on a fairly average amount.
I find as I’m getting older that I’m not that interested is buy more possessions so less clothes and stuff.
I want to spend all my time and money on going places and experiences some of which are free or very inexpensive.

 

[Cervelo]

I’m very impressed with your ESB costs. We also live in a 4 bed but do have kids who return from time to time but my esb is 3 times yours.

I presume you've got the smart meter installed and have you looked at your usage to identify where all the usage is going
This can be done by logging onto the ESB networks website and downloading your energy consumption

ESB Networks - Homepage

As part of ESB Group, we are licensed to build, operate, maintain and develop the electricity network in the Republic of Ireland.

www.esbnetworks.ie

I find as I’m getting older that I’m not that interested is buy more possessions so less clothes and stuff.
I want to spend all my time and money on going places and experiences some of which are free or very inexpensive.

I'm not sure if it's an age thing or the fact I'm not part of the rat race any more but I'm very conscious of everything that I buy nowadays
I look around my house and see lots of things I've wasted money on that aren't used any more and will probably be binned when I'm gone
A perfect example of this is CD's and DVD's, over the years I've built up a sizable collection of both and have an expensive Meridian HIFI system
and a very good Sony DVD player and I can't remember the last time I've used either
So now when I'm buying stuff it's nearly always on a need to basis or if it's not essential, time and thought goes into the process which usually results in me not buying most of the time but things still do get bought like the new Sony AV Amp that took just under a year from first thought to actually buying

I agree fully with spending money on going places and experiences especially the inexpensive or free one's
Every morning I get up I have my breakfast and around 8'ish I open the blinds to the front of my house and feel like Bono when I see the traffic
"Thank God it's them instead of......

 

[Odea]

I'm not sure if it's an age thing or the fact I'm not part of the rat race any more but I'm very conscious of everything that I buy nowadays
I look around my house and see lots of things I've wasted money on that aren't used any more and will probably be binned when I'm gone

Same here. Make do and mend is our motto. In fact, I have been getting rid of "stuff" online. Every time I sell something I say to my wife....lunch out or take out....

 

[euroDilbert]

@Odea the NCTS doesn't insist on changing tyres solely because are too old. Or at least it didn't in November 2023 when I last brought a car for its NCT. I did get 4 advisories for tyres being more than 6 years old (they are actually 15+ years old) but advisories require no action.

In general, people cost themselves a lot of money by not being well up on cars and motoring. The suggestion in the calculator linked to in this thread that a car needs changing every 5 years is nonsense. It's even more nonsensical if someone is doing below average mileage in retirement.

A basic new car such as a Dacia Sandero should last 15-20 years. Mechanical items in a modern car should last a long time if looked after. When the car starts to rust structurally which it eventually will, then it may be time to say goodbye but that should take a long time in a modern car, At least 10 years and probably 15-20+.

IMO everyone should try to become well up on cars and motoring and develop basic skills to maintain them well before retirement. Even if someone becomes physically incapable of working on their car, being knowledgeable is a great help when dealing with the NCT and mechanics, picking a good mechanic etc.

I've had my car (Toyota) from new for 22 years now. I get it serviced every second year (or on the rare occasions there is a fault). I use a local garage who are very reliable. I have also had the NCT warning notice for my tyres - but only replace them when the garage advises me to do so (based on wear or damage). The car passed its NCT first time every year (apart from when the Baile Átha Cliath sticker fell off the numberplate !). Unfortunately, I think it is reaching end-of-life now. I want to replace it - ideally with an electric model. However, the price points aren't right for me at the moment, so I'll nurse it along for another few years or until it finally becomes uneconomic to run. So - unless you crave that "new car smell" a car can last a lot longer than you might expect.

 

[holidayqueen]

I presume you've got the smart meter installed and have you looked at your usage to identify where all the usage is going
This can be done by logging onto the ESB networks website and downloading your energy consumption

I have a smart meter but did not think about doing that so I will certainly look at that Thanks

 

[Cervelo]

Same here. Make do and mend is our motto. In fact, I have been getting rid of "stuff" online.

Very much the same here, in 2019 I bought two top of the range bikes that was funded from selling items that I don't use or need anymore
It's the same with the new AV Amp, sold something that covered the cost and now the old AV Amp is up on Adverts

Same here. Make do and mend is our motto. In fact, I have been getting rid of "stuff" online. Every time I sell something I say to my wife....lunch out or take out....

This made me laugh as it's near enough what I say to Mrs C when I sell something or have a win on the Prize Bonds
But then it made me sad because I never hear it from Mrs C when she sells something or has a win on her PB's

I have a smart meter but did not think about doing that so I will certainly look at that Thanks

My average usage for January just gone was 14.6 kw per day at an average cost €4.45 per day
We have the immersion on for an hour every day, the washing machine is used about 3 times a week, the dishwasher twice a week
The oven is probably used every second day between the hours of 5pm and 7pm
The TV is on for at least two thirds of the day but after that it's just a couple of lights on in the house and what ever background electricity is been used by the fridge/freezer, yadda yadda yadda

 

[Odea]

This made me laugh as it's near enough what I say to Mrs C when I sell something or have a win on the Prize Bonds

We always enjoyed having a win on the Prize Bonds when we were posted a cheque. We would stroll down to the credit union and lodge the cheque then treat ourselves to a lunch. It is not the same now, getting your wins in new prize bonds or having funds lodged direct in to your bank account. I have €250k in Prize Bonds. Last €75 win was before Christmas. Total waste of time having money in these. It was OK when interest rates were nil.
Last year I cashed in a large amount of Prize Bonds and put the money on deposit earning 3%. This year I will reduce my holding by a further 50% and do the same again.
Big spend this year will be on new walk-in style bathroom. Last year we upgraded some plumbing in the house and also had the outside of our house painted.

 

[Monbretia]

It annoys me too when I look around the house at the things I definitely did not need and as you say will be dumped after me! Purties especially Now I buy nothing unless I really have a use for it. That said I am not into gadgets other than kitchen ones or tools so I am still using a 25yr old stereo which still plays cassettes and I have a few! There is a second old stereo upstairs that I use if working up there to listen to radio etc.

I have been monitoring my electricity usage for months and it's now just a habit even though I can't see any real use for doing it now. Initially I bought a monitor thing and checked everything in the house, I got rid of an old chest freezer that was heavy on electricity, I seldom use dryer or dishwasher unless I have family staying. My average daily unit usage is 6/7 units, past few days it has been nearly double that as I am having visitors this weekend and there was a major cooking/baking stock up, turned on the spare freezer and fridge too for the overload.