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How to achieve the life you want in retirement

Retirement may seem like a long way off, but if you want to be comfortable in your old age, you need to start planning now.

 

by Michelle McGagh on Mar 01, 2012 at 11:48

How to achieve the life you want in retirement

The savings shortfall has left today's average pensioner needing £140 a week of extra income in order to feel comfortable. But those saving for retirement now can avoid a similar fate by following some easy steps and visualising the life they would like to lead.

According to a report from annuity provider MGM Advantage the average retired person needs an extra £7,300 each year in order to feel financially comfortable. That's a total of £86 billion for all pensioners in the UK.

It also states that retirees fall into one of six categories:

Thriving: Has both the money and good health to really enjoy retirement, and to do the things they have always dreamed of.

Aspiring: Dreams of a better life in retirement, but may not be able to achieve it as money hasn’t performed as well as hoped, or health problems may cut down their ability to travel and enjoy hobbies.

Comfortable: Enjoys good health, and has enough money to maintain the same lifestyle throughout retirement, as well as treat themselves and their family occasionally.

Careful: Independent, self-sufficient, and wants to keep the same lifestyle throughout retirement. But the modest pension, investment and equity they have built up over their working lifetime is making this tough.

Squeezed: Income will be less in retirement because of low savings, and they may have to continue working if their health allows.

Restricted: Mainly dependent upon the state and possibly family for financial support, they have to budget very carefully and cannot plan ahead.

Currently most pensioners fall into the comfortable category, with 29% of those surveyed by MGM Advantage placing themselves in that bracket. A total of 15% described themselves as thriving, another 15% as aspiring, 13% as careful, 20% as squeezed and 8% said they were restricted.

The big squeeze

It is expected that, as generous defined benefit pension schemes come to an end, more people will find they are moved down the scale from comfortable to careful, squeezed or even restricted.

‘These groups… are not static. We do not expect the same split of types in the UK Retirement Nation in, say 10 or 20 years’ time… we expect more people to fall into the categories with less retirement income, where budgeting is more of a concern,’ said the report.

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6 comments so far. Why not have your say?

Raymond Hurley

Mar 01, 2012 at 21:37

I've read some rubbish in Citywire articles,but this must get first prize.

The remarks by the two retirement 'experts' left me completely bemused.

Did some one get paid for this

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William Phillips

Mar 01, 2012 at 22:04

I am always vastly amused by the way fundsters and their middlemen try to convince people that they cannot be happy in retirement unless they have saved vast amounts for years-- on terms which reward the professional money manipulators regularly for very little effort, naturally.

Far from needing an EXTRA £7,000+ pa to feel 'comfortable', I am enjoying life on less than that all in. I have been retired for nearly 30 years (in the sense of not needing to work to support myself) so I can speak with some authority on how to make the most of little.

OK, I am frugal by nature, don't drink, smoke, gamble or take drugs, am not interested in world cruises (Costa or otherwise) and do not have that expensive luxury, a family, to support. But I have the leisure to think, dream, walk, enjoy the vast range of free entertainment piped into one's home or the literature dispensed gratis at libraries... and smile at the frantic rush towards perdition of a world which supposes contentment (I will not say wisdom) can be bought.

In the whole history of the world, few have had the combination of freedom from fear of the Four Horsemen and opportunities for self-improvement and enlightenment that we older Brits have. Yet all we can do is moan and clamour for 'rights' and 'entitlements'. Greying ingrates should be turned into pillars of salt. They have already damned their posterity to live less well by their profligacy.

Modern middle class life was once defined as doing work you don't like, to earn money you don't need, to buy things you don't want, to impress people you can't stand. The fundsters want you to pedal harder on the hamster wheel so you can go on living that sort of life after you stop working, Lucky you!

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John Roycroft

Mar 02, 2012 at 10:00

William Phillips

Lovely comment William and very reassuring.

I am 47 and hope to be able to retire at 60. I too envisage a retirement of simple pleasures: internet, national trust membership, satellite subscription for football and I will be most content..

Like you, I am not interested in cruises, golf clubs or marina fees. Neither do I drink or smoke.

It is good to hear from someone who is actually retired that it is possible to ignore the scaremongering of those who have an interest in benefitting from our anxiety and enjoy life after work without needing a vast annual income.

Long may you enjoy your contentment.

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William Phillips

Mar 02, 2012 at 15:17

Thank you, Mr Roycroft,

My circumstances may be too spartan for some, but I firmly believe that a retired couple who have paid off the mortage and don't run a Bank of Mum and Dad (big asks these days, I grant you) can live pleasurably and with peace of mind on £12-15,000 a year-- not the twenty grand the fundsters always pull out of the air as a minimum. The State pension, which I don't draw yet, would cover half or more. A modicum of sensible low-risk saving, even if you do not begin till your 40s, should do the rest.

Income tax thresholds rising, interest rates at least unable to fall further, free BBC4 and Radio Three at home, free bus travel and bargain-priced NT membership giving access to the kingdom's treasures (or discounted day trips by rail to go further afield), last-minute hotel rooms booked on line for a song now your days are flexible... there's a lot to savour, however sedentary you are.

With all its flaws, our country is the most beautiful, historic and intellectually and artistically enriched on earth. Why chase the scorching sun overseas in some ghastly floating anthill? How much of your own landscape-- physical and interior-- do you know?

My income is four or five times my outgoings, and I look forward to giving most of it away in and after death. But whatever your luxuries, keep your necessities low. Shopping around is easier than ever with the internet.

One last tip-- stuff central heating. Why heat rooms you are not in? A one-bar portable heater with a fan will keep you warm anywhere short of a baronial hall. Ours is a temperate climate and growing more so. All this whining about 'fuel poverty' is based on the alleged needs of obese couch potatoes.

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Raymond Hurley

Mar 02, 2012 at 17:52

William, I could not agree more (with the exception of the one bar electric fire).

An excellent short note,much better than the article by Michelle McGagh that inspired it.

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John Roycroft

Mar 03, 2012 at 06:45

Thanks again for your reflections William.

You are clearly enjoying the unfashionable pleasure of living modestly but well within your means.

I have been away from the UK since 1997 as a primary school teacher (currently in Bahrain, previously in Japan and Nepal).

Whilst my salary in the Middle East is comfortable ,we stiil gain great pleasure from keeping costs to a minimum. It is a source of pride that the cleaners at the school have more expensive telephones than mine and the security guards have better cars.

We should have enough saved to take a decent dent out of my boys' university fees (they are 7 and 10) and hopefully when the state pension kicks in we can release some capital to help with a house purchase for them.

For us, money is a route to freedom not greater consumption. There is nothing material I could buy for 50k that would give me as much satisfaction as seeing the money in a bank account (or invested). Knowing that I could go out and buy a brand new car if I chose is sufficient.

Hopefully the boys will be able to see the logic of our lifestyle and won't rebel by blowing the lot when they are older!

We try to focus on the things in life that really matter. We spend a lot of time together as a family and my wife chooses not work.

Upon retirement we could return to our modest 2 bed terrace in Bristol (currently rented out) or stay overseas. I would however like to make up for all the time that we have been away from the beauty of the Britsih countryside.The one bar fire really appeals to me William but I might have a job convincing my wife!

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