Which suggests around £25,000 – £30,000 a year is enough to retire on and be content and who are we to argue. Other unspecified experts suggest 2/3rd of your working income is required for a happy retirement. I have decided to share the details of our retirement income and savings on the blog to help others on a similar journey. I know our circumstances are peculiar to us and what works for us won’t necessarily apply to you, whatever these online calculators and column writers suggest we are all individuals and what we feel we can live on and have managed to save will be different from anything you can and want to do. But the information might inspire you or make you re-think your own ideas for financial independence and early retirement.
There are four reasons why early retirement for us has become possible.
Reason number one – downsizing
By 2008 our son was settled with his partner and we were able to sell our family home and down-size to a small flat that was cheap enough to buy mortgage-free [hurrah!] with enough left over to pay for the campervan [double-hurrah!]. The flat is also cheap to heat and run and so contributes to reason number two.
Reason number two – frugal living
Although I am grateful that a company is willing to pay me to give my time and do stuff I have the skills to do, my own income as a travel writer and administrator is below the average in the UK [currently £26,260/year gross]. Jointly we currently receive around £36,000 a year net from our different occupations. I [honestly] cannot say that we are ‘ultra-frugal’; we have lots of holidays, eat out occasionally, go to gigs and plays, don’t always shop at the cheapest supermarkets and generally enjoy ourselves. But the main thing is that we spend less than we earn. Over the past six years [since returning from our ‘gap’ year] our average annual spending has been £24,125 a year [about 2/3rd of our income] and we have saved the rest.
Before we can retire our savings need to be sufficient to cover a period of nine years [see below]. After many modifications and adjustments we have come up with what we hope is a generous budget for retirement of £27,000 a year. This is more than 2/3rds of our current working income but is near the half-way point of the Which figure above. Because we have lived fairly frugally over the past six years and we are naturally cautious we wanted to have a bit of expansion room in our early retirement ‘income’. We have estimated that this amount will be enough for monthly meals out, cultural stuff and [most importantly] travel in the campervan [we are not planning lots of long-haul flights]. It should also be enough to cope with most small household crises [for example buying a new washing machine] and for any larger problems we have a contingency fund of £15,000.
Reason number three – we have pensions
We have saved sufficient to cover our ‘income’ for the years from 2017 to early in 2026. In this momentous year all of our various pensions [none of them very large] will provide us with an income of a similar amount.
A quick bit about our pensions. We both have public sector pension that are final salary pensions and often described as ‘gold-plated’ in the media. I have worked in the NHS for around thirteen years of my working life and for this will receive just over £2,000 a year [not even copper-plated really]. Mr BOTRA will have 30-years service in higher education and so will receive a more useful pension of around £12,000 a year. In addition I have a couple of small private sector pensions from about eight years in the charity sector that might bring in a few hundred pounds a year but will be dependent on the annuity rates at the time. I am ashamed to say that for many years I didn’t even save towards a pension but you live and learn. According to the current forecasts our state pensions will make up the rest of our income.
Reason number four – the inheritance
Inheritance doesn’t sit comfortably with us but there is no doubt that when a close relative died we inherited enough money to bring our retirement forward by about five years. Some of this inheritance came from selling a house but we also maximised the money by working hard to sell his 170+ paintings, 250+ ornaments and many other collectables. There was a four-month period in 2014 when we spent our evenings and weekends learning about fine china and collectables, placing detailed adverts on Ebay, packing delicate ornaments and posting them to far-flung destinations. We dealt with dealers and enthusiasts to make the most of what we had been given. We are truly grateful for the opportunity this money has given us and as the money came from a relative who enjoyed a long retirement from his mid-50s and spent his money on lots of holidays I like to think he would approve of our choice of how to spend the money.