The Retirement Newsletter: Retirement satisfaction — better in the UK or the US?
Issue Number: -124 — where will your pension ‘buy’ the best retirement?
Photo by Dave Sherrill on Unsplash
Welcome
Welcome to issue -124.
In this newsletter, I will take a brief look at a report that looks at retirement in the USA and make some comparisons to the UK. Where might you get a better level of retirement for your money? The US or the UK?
And, please feel free to share this newsletter with any of your friends that may find it interesting or useful - thanks….
Money
I am not a financial advisor. I am writing about what I have read over the years about money and preparing to retire. The following is not financial advice.
Recently, I came across an article on retirement in the US — These retirees are more likely to be ‘comfortable’ or ‘affluent,’ study finds — and thought it made an interesting contrast to the UK.
The article, “These retirees are more likely to be ‘comfortable’ or ‘affluent,’ study finds”, makes use of data from Employee Benefit Research Institute — Why Do People Spend the Way They Do in Retirement? Findings From EBRI’s Spending in Retirement Survey — and unfortunately, I cannot access all the data as it is behind a paywall.
Anyway, from what I can see, the report identified five types of retirees:
Struggling
Just getting by
Average
Comfortable
Affluent
It looks like the “Average”, “Just getting by”, and “Struggling” are the equivalent of the “Essentials” in the UK, which I wrote about in “How much money will I need for an Essential, Moderate (Comfortable) or Luxury retirement?” and “Comfortable” and “Affluent” map to the groups “Moderate” and “Luxury”.
From the article, retirees with a guaranteed income and little debt, who have a planned strategy for handling their retirement and their cash flow, are the most likely to be satisfied. These retirees are likely to be nearly mortgage-free, with no other significant debts. These retirees are found in the “Comfortable” and “Affluent” groups.
Retirees that rent and are carrying significant debt are less likely to be satisfied and will be in the “Average”, “Just getting by”, and “Struggling” groups.
So, how do the costs between the US and UK?
Well, in “How much money will I need for an Essential, Moderate (Comfortable) or Luxury retirement?” I looked at the figures produced by Which? in May 2021 — How much will you need to retire? — and came up with the following gross (pre-tax) incomes per year for the different retired groups:
Essential — Single person: £13,600 — Household: £20,000
Moderate — Single person: £21,900 — Household: £31,200
Luxury — Single person: £38,500 — Household: £52,000
In the US, the numbers (see A View From the Partners: Practical Takeaways on EBRI’s Retiree Profile Research) seem to be:
Essential (average) — less than $40,000 gross per year
Moderate (Comfortable) — $40,000 to $100,000 gross per year
Luxury (Affluent) — $100,000 gross per year
If I convert the dollars to pounds Sterling ($1.37 = £1), we get:
Essential (average) — less than £29,000 gross per year
Moderate (Comfortable) — £29,000 to £73,000 gross per year
Luxury (Affluent) — £73,000 gross per year
And what is surprising is that the figures suggest you will need more money in the US than in the UK, a lot more in some cases, to have a good retirement in the US.
So, it appears that in terms of having a better level of retirement, the UK may be a better place to live than the US. However, could it be what we are seeing here is the impact of ‘hidden value’? You need more money in the US because of expenses such as medical insurance, whereas in the UK, we have the NHS and hence no need for medical insurance? How much ‘value’ does the NHS add to your retirement in the UK?
Anyway, it makes you think. Where is the best place to retire and why?
Please note I am not a financial advisor. I am writing about what I have read over the years about money and preparing to retire. This is not financial advice.
Travel and Holidays
OK, I like trains, I like sleeper trains, and I like long train journeys.
Recently, on a ‘trawl’ of the Internet looking for things to add to my bucket list, I came across:
The company — Midnight Trains — plans to launch in 2024. And 2024 is handy for me because if you do the maths on the newsletter issue numbers — issue -124 — you will find that 2024 is the year I plan to retire.
Yep, one for the bucket list.
Useful links
UK Government Website — How to avoid pension scams
Reflections
I have just had a week off work, which has made me even more determined to retire sooner rather than later.
I had good weather for the week, and while I did not travel far from home (thanks Covid!), I did get some great walks around the local countryside and woods.
On my wanderings, I met a local woman who was busy harvesting Elder Berries and some mushrooms for her lunch and to make Elder Berry preserve.
And it was great to see all the late summer wildflowers in bloom.
Next week
Next week I'll look at 'The Great Retirement'. Is there a rush on to retire?
Thanks
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Until next time,
Nick
PS, If you have something you would like to contribute to the newsletter — a story, advice, anything — please get in touch.
Please note: I am not a financial advisor. When I am writing about money and financial matters, it is based on things I have read about money and about preparing to retire. IT IS NOT FINANCIAL ADVICE.