I am more and more afraid of aging. More particularly how I will finance my retirement. I am almost at an age where, if I stumbled and fell, I would have “fallen”. I even caught myself emitting an “ahhh” when I sit down in a comfortable chair and an “ooof” when I get up.
Last weekend I left the garage door wide open with the lights on for hours after bringing chairs to the car. I was probably distracted. I’m sure I need to change a fuse somewhere. Then, after cooking the most delicious roast lunch (I gave in and fired up the Aga for the weekend), I let the sauce simmer all afternoon.
Signs of a failing mind? I’m sure I left my marbles somewhere. I hope they are in a safe place.
These incidents raise questions. How much should I save for a comfortable retirement?
I am not the only one concerned by this enigma. Three-quarters of savers (77% to be precise) don’t know how much income they will need and only 20% are convinced they are saving enough, according to research by Hargreaves Lansdown. Although 76% of all statistics are made up, I am 100% sure that I am not part of the 20%.
According to research, 40% of the UK population is on track for a “moderate” retirement. The Pensions and Lifetime Savings Association defines £20,800 as “moderate” income for a single person and for a “comfortable” retirement, including three weeks in Europe on holiday, you will need £33,600. Or £49,700 for a couple.
I wonder if this is a new definition of the word “comfortable” that I didn’t know existed before? For me, a comfortable three week European holiday would involve staying at La Reserve de Beaulieu. And that’s your annual exploded budget.
It’s definitely time to create a cost of living spreadsheet. For this exercise, I’d suggest pouring in a tall gin and slimming tonic (I’m still slimming down) to deal with the inevitable bad news. Council tax, home insurance and health insurance make up the better part of £20,000 a year. Club memberships, overseas property service charges and the beach hut cost an additional £10,000. Cars drop £15,000 and I haven’t even eaten yet.
There are trips abroad, gifts, outings, takeout, subscriptions and unexpected expenses for items that wear out, need repair or replacement. Next are the energy costs – thrill! — maintenance of the house and projects such as a dressing room and an enlarged kitchen-dining room, adding to the budget thrift stores, unnecessary purchases and clothing.
The garden needs to be gardened (I only do the glory stuff after the beds have been dug and the lawn mowed) and the house needs to be cleaned. Preferably not by me. And I forgot the dogs. That’s still £6,000 a year with vets bills included.
After all this analysis, I am distracted. I have never been so old. Worse still, I will never be so young again. It doesn’t matter how many pairs of Moncler sneakers I buy or how many times I listen to “Harry’s House” by Harry Styles. The gray hair and the new signature photo testify to this.
The only reason we try millennials, millennials or Z or whatever they are now is because we’re jealous. Jealous of full hair that grows where it should, as opposed to the ears and nose. And the older I get, the more health issues start to show up. Is it worth doing this analysis? Will I be physically able to do whatever I want when I retire anyway?
The dire economic situation puts additional pressure on personal finances. Inflation forces you to save more for the same result, while higher taxes and benefit freezes eat away at what you can save. Rising interest rates have increased mortgage costs and falling markets are depleting your retirement fund. It’s back to the spreadsheet, threading a pair of read specs.
With retirement planning, there are a few rules of thumb. First, you must save at least 12% of your income each year. Until I became independent 15 years ago, I was quite efficient in this department. Since? Not really. Telling yourself to make such sacrifices falls into the same category as cutting down on alcohol, never smoking, and eating less salt. Usually on deaf ears, until it’s almost too late.
The great unknown is how long I will live. If I purchased an annuity, turning a lump sum into an annual income, how much would I receive? At current rates, for a 55-year-old man, that’s £5,000 a year for £100,000. At 52, I’m almost there. That’s a lot of lump sums to save.
Maybe that triple-locked pension everyone keeps talking about will help? I have 15 years to wait until I can collect my state pension. Although at around £10,000 a year, this will only fund my big bubbly habit, an annual ski trip and a few pairs of underwear.
In my imaginary retirement, I would go to the Caribbean for the winter months. This would save on heating bills. Antigua would be my choice, but you’re better off budgeting between £15,000 and £20,000 a month to rent a half-decent flat. More if you want a house. You will still have to buy food, rent a car, and the inevitable costs of high living.
However, all those fantasies about retirement options aren’t going to go away if the money isn’t there. Perhaps the best option is to befriend someone who owns a house or a massive yacht. After all, what’s the point of having rich friends if they don’t invite you to stay? Surely they will be bored without you?
The simple conclusion is that I haven’t saved enough. Pension calculators tell me that I have about 67% of what I need to live the lifestyle I want to maintain.
I better face the facts. I can never retire. Maybe I’ll reinvent this topic so I can write forever. The problems of the elderly. It sounds good.
James Max is a television and radio host and real estate expert. The opinions expressed are personal. Twitter: @thejamesmax