A Comfortable Retirement

Some of our friends here are retired and it has always puzzled/bothered me that in the twilight of their lives they struggle financially with one couple even forced to continue working into their early seventies just to make ends meet. Is this what I’ve got to look forward to?

It worries the life out of me. After a bit of a nomadic life between France and Australia (with maybe 18 months in the UK working) and my kids really spread out I have had a lot of time not working. I’d like to get some little houses to rent out and hopefully be paid off by the time I retire so that that becomes my ‘pension’. Worst case I may be forced to go back to Oz to get in the system there (sadly if I lived in quite a few other countries I could still claim my Aussie pension but not from France unless I’m there when I get it then move back!).

ETA not quite 45 so still have a good 20 working years ahead of me. Seriously wonder if I should retrain here to a high paying job!

So many variables!

We are comfortable and live well within our means, but then we have no desire to live an extravagant life style. 12 year old car, no exotic holidays, don’t buy much stuff, only expensive hobby is the garden and that supplies lots of our food, etc etc. We have deliberately done what we can to keep outgoings like heating costs low. So definitions of what ends you need to meet can differ wildly!

However, the gite and rental flat bring in the jam on our bread and butter, and allow us extravagances. And to me that works well for retired people as 1 gite is manageable “work”. There is something that if you have worked all your life then actually having something you can call work is actually quite good for the soul. Spending all day on the golf course and in bars would be my idea of hell!

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There’s a difference between working at say 70 to pay for ‘extravagances’ and having to just to survive.

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Not necessarily: it’s all down to a combination of luck, planning and your personal circumstances.

In my view there are several critical elements.

INCOME
For most people that will mean pensions.
I took great care to ensure that I could get the maximum UK state pension by ensuring that my NI contributions were up to date. and elected to delay taking my pension for a couple of years in order to boost it.

I would also suggest that at least a decade prior to retirement, one enters government / state employment (civil service, NHS, police etc). The logic behind this is that the government pension schemes are generally pretty good and one is insulated from issues that can occur with commercial companies.

A third income stream would be extremely beneficial. My wife and I really do not want to run a gite, B&B or to rent out a second home. However there are a number of other possibilities such as selling on eBay etc.

REDUCING OUTGOINGS
Outright house purchase is a must – preferably one that is as energy efficient as possible.
Also paying off any credit cards and loans.

We are making great efforts to become more self-sufficient food wise – although my wife is not keen on breeding rabbits for food!

CARS & WHITE GOODS
I recommend immediately prior to retiring, buying the most reliable car possible with a view to running this into the ground. Same goes for white goods.

LAST BUT NOT LEAST
I have informed my children that the bank of Mum and Dad is permanently closed!

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But one person’s “ just surviving” could be another person’s idea of comfort? If they are actually below the poverty line then that’s bad, so presumably no full state pension.

And as a WASPI woman I took care to make sure I had the max years of NI contributions, but didn’t foresee that the goalposts would be moved after I had left full time employment. Best laid plans and all that… and the government pension schemes available to new recruits now are far worse than they used to be. The old approach of lower salary but higher pension to compensate is now lower salary and lower pension.

So it’s good to try to plan, but not everyone has that opportunity, and things can change through no fault of your own.

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True, those of us who have defined benefit pensions are very fortunate. Which is why Nigel’s point about a spot of public sector employment is very relevant.

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We did it the other way round to what Nigel suggests. We both started with public sector employment and then moved to the private sector so our PS pensions were “locked in” and gathering pace, as it were, in the background.

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Properties provide the best pension IMO as they return good income and unlike a standard pension pot that disappears when you die property is still there for the benefit of your children.

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Perfect.

If you you have the patience and stamina to put up with the trials and tribulations of renting John. :slightly_smiling_face:

We rented once when we went on assignment to South Africa. They were a lovely Aussie couple. Off they went at Christmas back to Oz for a month but it never occurred to them to turn off the water at the mains. I can’t really blame them for that. Then there was a big freeze.

The first I knew of it was when my neighbour rang me in SA to say the there was water pouring out of my front door. It was a largeish front garder so I knew that if she could see when it when pottering up to the shops it must be serious. I flew back at once “for a meeting” (the Firm was quite generous in those days) and opened front door to find our lovely Junckers floor looking like a scale model of the Alps and strange fungus growing on the walls. We patched it up but it wasn’t until we demolished 90% of it and rebuilt in 2001 that it ever lost that musty smell.

I flogged that house two years ago and bough an apartment which is empty 11 months of the year. It’s a terrible waste but I couldn’t face a rerun of my pervious renting adventure. Especially as I’d be taking all the risk and the tax man would be taking half the profit. :pensive:

Well I didn’t plan at all throughout my working life but had the very good fortune to find myself accidentally arriving at retirement with enough to live on to our requirements but below what the French government (but not UK) decides is worthy of tax.

After a lifetime of wandering the globe I managed quite by accident to pick up one good company pension and 2 small French ones, Those, together with a reduced (but not as reduced as I thought it should be) UK OAP has contributed to our peace of mind.

But it wouldn’t have worked out that way but for one important person, and here I get controversial, The Blessed Margaret. :laughing:

Never having owned any property, we managed to get a rather nice council flat at the age of 42 and, as soon as was possible, bought it on a 100% mortgage. Lived in it for 15 years then, with a fortuitous but not massive redundancy, sold at double the price, paid everything off and moved to our already little (and very cheap) holiday home here in France. That had been bought for cash some years before and we were now able to double its size.

Advice? In the absence of pure luck along the way do everything you can to make sure you retire with absolutely no debt. I pay every bill as it arrives so that I don’t forget, haven’t paid interest on a credit card in over 20 years and buy everything I can here on a debit card.

I didn’t follow that advice, but I was lucky along the way. If you want to make sure of a worry free retirement, best not to rely on luck. :wink: :slightly_smiling_face:

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There really are not many of those still available to new joiners (certainly in the private sector) - the ladder has certainly been pulled up on these schemes.

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Sage advice - just what we have done. We had a CC deal that provided an interest free period on a huge debt and that was paid off in full when we sold our UK property/business interests. It was risky but we were allowed to use the deposit on paying off this debt before completion meaning that the equity left after settling the mortgage and business loans etc gave us sufficient funds to embark on a new build project here in France. Timing was critical; the interest free CC deal ended days after we were able to settle it! Had we not met that date, the interest/defaults kicking in would have been huge - phew :relieved:

@JJones I couldn’t agree more Jane! The only difference for me - the lack of green fingers with the potager! Ah well, try again next year. :upside_down_face:

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That is just what we call our gite income, our jam.
We don’t know how long our income has to last for and we can’t say that our private pension has been making us much money at all.
We are considering having help with the gite next year, if our already registered guests actually come.

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Two of the issues about struggling financially is that:
if they came over some years ago it was all too easy to be lured by the fact that selling a UK property meant that one could afford a MUCH bigger French house with a nice bit of land - without having a true appreciation of the costs of renovation / restauration and the day to day costs of living in France.
Also, if they (as we) came over 12+ years ago the pound was equivalent to 1.4 - 1.5 euros. On that we lived very comfortably on our UK pensions. Now it’s 1.1 euros and life has got a lot tougher.
Also, not all pensions are index linked, some are fixed, so the value of the pension in pounds is steadily eroding over the years.
What started as a second property where our friends could stay has become an essential additional income as a gite that helps us stay in the place we love. We’re very glad we have that option.

@spj add to that, the fact that people were tempted very much to take out mortgages or loans to buy their French pile when loan interest rates were lower than interest gained on savings. That has massively reversed/eroded over time and much of the original investment has possibly bean eaten up… (perhaps literally!)

Depends on what type of lifestyle you wish to live and on your previous financial planning. My father always said to me that on retirement you must own your home and be debt free. When moving here 12 years ago, we refused the banks offer on a mortgage and placing our funds into some type of savings account. In 2007 the pound was in the region of 1.44 but on planning our future we worked on a 1.20 exchange rate. Some years we have been in front some years not so. This year because of covid and not taking holidays we have managed to live on our two UK state pensions, our other pensions( one private and one company) have stayed in our UK bank. Some people it would appear to me have moved over to France seduced by cheap property and at the time a good exchange rate, I,m afraid they are now struggling and to a certain degree the author of their own financial difficulties

I’m not entirely sure you can blame people for believing what they were told about the health of the UK economy and not foreseeing the economic crash in 2008. Many experts were caught out too…

But two average UK state pensions puts you above the line considered to class as poor here, but not quite reaching the mean figure for 50% of the population…

personnes seules sont considérées comme pauvres si leur revenu disponible est inférieur à 800 euros mensuels. Jusqu’à 1 300 euros, elles appartiennent aux classes populaires et enter 1 300 et 2 300 euros aux classes moyennes. Elles sont qualifiées d’aisées au-delà de 2 300 euros et de riches au-dessus de 3 155 euros par mois.

Pour les couples sans enfants, le seuil de pauvreté se situe à 1 550 euros. Ces couples appartiennent aux classes moyennes entre 2 500 euros et 4 500 euros. Ils sont riches au-dessus de 6 200 euros. Les couples avec deux enfants sont classés comme pauvres si leurs revenus sont inférieurs à 2 000 euros mensuels, comme classes moyennes entre 3 400 et 5 800 euros et comme riches au-delà de 8 200 euros.