Pension income

May I ask you what happens when you retire through ill health? This is likely to be my outcome

Most people seem to be looking at having pensions greater than any amount I've ever earned in my working life. Maybe I have very simple tastes, but I'm single and most of my hobbies are cheap or free (I like walking, I ride a friend's horses, I read and enjoy cooking, I run with my dog) and I can live very nicely currently on around 1k per month. I'm hoping for a good few years of active retirement during which I will save in case of need carers in future (although my kids have indicated that they would all chip in for this if necessary).
I'm hoping to retire at 65 (in 18 months) and self support until my pension kicks in at 67, while I am still very fit and active.

If you aren't paying rent or a mortgage, then £2000 might be enough. The retirees I socialise with go on holiday frequently and seem to live comfortably on what must be sizable pensions-think IBM level. It's worth working out bills, car replacements etc too. Work out the vague cost of food etc too and add a percentage for inflation. Think about entertainment. What are you going to do with your time? Living when you have time to do stuff, costs money.

Really useful thread. I find myself wondering about this often as I can’t decide if I’ll be OK.
57 and public sector DB scheme. I am tired already and parents died in early 60s so I don’t want to retire too late.

Am single (happily!) with 3 young adult DC all at home for the foreseeable. Divorce has wrecked my finances.

Pension will be 19k if I go at 60. Plus enough of a lump sum and savings to pay off the rest of the mortgage on small house worth about 550. Nothing else left though. Am quite frugal but would like to help the DC with deposits so - will probably partially retire at 60 and limp on part time for 2 more years doing 3 days pw giving me another 30k a year which I will try and save to stretch pension out until state pension at 67. Then sell up and give a chunk of the house equity to the kids and live well on 30k (?) in a smaller place somewhere.
If they never leave home they can pay towards it! I don’t wanna work until I die.

Why uni fees? Mad to pay those

I am working towards retiring at 55 with a monthly income of £2,000 which will be very comfortable really - mortgage paid off and DH contributing to his half of bills / food etc

Completely agree with this . Some people will really struggle in retirement with rental costs but also due to the ridiculous amount they " need" to live on. I admittedly don't have a mortgage ( but only because it was paid off as a priority and we luckily also benefited from low interest rates for a long while) but I also don't feel the need to spend a fortune on the latest gadgets, I don't use a dishwasher or have a tumble dryer, or have take away every week. I genuinely think some people spend too much on non essentials. I rarely buy new clothes ( use birthday money or vouchers if I buy any), however I enjoy a meal out occasionly a trip to the pub weekly or a takeaway ( not weekly). I enjoy a holiday abroad every year too and a combined income of less than £20k a year (I am not yet retired but will certainly be better off if the state pension is still in payment when I am due to retire , in approx 10 years time) .I don't think there is anyway the retirement amounts quoted as "needed" are realistic .

@Turmerictolly 's last post reminds me that everyone should remember that income tax will apply. So the quick dirty explanation is that if you have a properly set up pension scheme, your contributions go in tax free, the government then adds the tax that you would have paid on that sum as income to your savings, and if it remains invested in a pension scheme until you are 67-ish, any capital gains and dividend income pile up into a savings account. Obviously, I have massively over-simplified this. But it is a very sensible way to start retirement planning.

Once you start taking an income from your pension pot, you pay tax on the same basis as anyone else, but if you have kept your big saving pot growing out of tax for 20 some years, then it's worth a lot more. I am shit with financial projections and calculations but I used to do this stuff for a living. It really matters.

Currently about 100k a year (both retired but I can't access my own pensions for about 10 years) but of course there are the outgoings, including teenagers and uni fees in a few years' time. We don't have a mortgage though so we're definitely comfortable.

As a current 77yo retiree /pensioner - how you will live in retirement will obviously depend on your income.
I have the old basic state pension plus SERPs and my state pension is circa £12k. This is the backbone of my income. I also have 2 small personal pensions/annuities which give me an extra £6k pa which is obviously taxed so my total income pa is about £17k

This is more than enough to have a reasonably comfortable life for me. I manage to save for house repairs etc and have shares and ISAs to help out too. On the plus side I have a house worth about £500k and no mortgage.
I get 25% off my council tax (which is still my biggest expense), I run a 20 year old car, manage 2 short holidays in the UK each year and support a 8year old dog.

Having been a single parent all my full-time working life it is harder for me than most couples as they will have twice the personal allowance and twice the pensions but not twice the costs.

Bear in mind that sadly many now happily in a couple will find that they will be single for at least some of the retirement years.

I'm aiming to have £25k p.a which seems to be a £500k pot. I own a house outright, I'm 55.

With inflation, I don't know how well I will live on £25k (I'm single). But I'm not living some kind of Scrooge life now to have maybe £30k p.a for retirement. I split what I save and spend. I scrimped a lot in the past to pay off my mortgage, I'm not doing the same now for a retirement that isn't guaranteed, given you don't know what will happen with health.

@Oblomov24 , it happens if you save just a little bit every month. Obviously the more you can manage the better, but start young and keep saving is the simplest and best advice any one can offer you. If anything looks too good, it's a scam. Those are my main rules.

We might start retirement apparently well funded but inflation is the main enemy if you are older. What was initially adequate doesn't cover what it used to. Which is why a decent chunk sensibly invested and pegging along with inflation is SO important for the long term. Nothing is going to be cheaper 20 years from now.

I find these posts scary. £80k? £45k? Many people don't earn that much, when working, so how are they going to have a pension of £45k?

I read all these type of threads and still remain baffled by how much I need. I'm 62 and saving as much as I can until retirement and then I'll wing it and pick up p/t work if necessary

Thats more like it! Nice to see a more realistic post on this, rather than the ones which add fuel to the rumour fire that most pensioners are very wealthy, and have more to spend in retirement than others earn at the height of their career!

www.retirementlivingstandards.org.uk/

It might be with looking at this to help start thinking about what type of retirement you would like and what that means for savings you need to pay for it

I am 65 and DH is 68. Our income is a combination of state pension, pension credit and PIP. It adds up to about £29k a year and we manage fine on that. We get most of our council tax paid, and we are sensible with heating etc so dont have huge bills. We have Freedom Passes to travel around London and mostly use that to travel rather than pay for petrol and parking. Our dcs help out with some bigger costs (replacing appliances and gadgets) as they've all done well for themselves and like yo treat us.

Our house is owned outright, we have modest tastes and a history of frugal living (our income has been lower than this in the past), we can cook well and economise without feeling hard done by. Our hobbies are cheap - local groups, walks nearby, gardening, seeing family, watching films at home, visits to interesting places (mostly free, lots available as we're in London). We go abroad a couple of times a year (often this is long haul as we have family in various Asian countries - but costs are cheap once there). We eat out occasionally for special occasions (often dcs pay), but prefer to dine at home.

We have combined pensions of 35k PA and both have full state pensions. I have retired already due to ill health. Redundancies are a distinct possibility at DH workplace. We have no mortgage and around 500k in savings and investments that are currently making us a decent return, 20k as of last quarter. It cost us 29k to run the house and all expenses last year inc a weeks holiday and a weekend away. DH has been chucking in his pension since I was retired early. We are luckier than many people but if he is made redundant it is unlikely he would be able to get a job in the same field so he would be retiring earlier than expected by about 3 years.

I am 62 and have flexi retired from the NHS. I have a pension of 16K pa, another small pension of 5K pa which kicks in at 65 and then the state pension at 67 so at the point of full retirement I guess I will have about 30K pa. DH will have a workplace pension of 40K. We both also have SIPP's which we hope can be passed onto the dc. I'm currently practicing living on a reduced income by saving all of my pension income. I feel very fortunate but we have both prioritised pensions and savings in the last 15 years, have paid off the mortgage and don't live extravagant lifestyles. The one thing we do want to do in retirement though is travel!

@fridaynight1 if you pay council tax at around £220pcm, utilities at around £200pcm, and insurances at around £100-150pcm and live alone, there’s not a huge amount left on state pension of around £800 every 4 weeks is there? How do you think it’s easy to live on just that?

DH and I are both 46 and currently have around £350k in pots between us although I have a small DB scheme from a previous job which would be worth around £200k if it was a 'pot' (around £8k a year salary).

At the moment we're hammering our pensions because we're earning a decent amount but aware as kids grow in the future we may not be able to. School fees kick in this year too.

Planning to take out the 25% tax free lump sum age 57 to repay mortgage. Fingers crossed. Then I would like us to have around £4K a month after tax to live on from early-mid 60s. I think we're on the right track for that.

My husband is 15 years older than me and retired at 60. I left my job at the same time in the NHS and went part time in a friend’s gift shop up until Covid broke. We live on my husband’s pensions of around £45,000 including state pension plus £150,000 in savings. I can drawn a small pot this year as I turn 55. The plan at the moment is to drawn my NHS pension at 60. We have a really lovely life, eat out regularly, 2 holidays abroad a year, plus weekends away in Uk every 2-3 months. Buy new things for the house and clothes. We are amazed we live this life on the money we have coming in. We also run 3 cars. However my husband does all the house maintenance himself and car maintenance. We decided to both stop work early as we have no children and decided to enjoy life whilst we can as life is too short. I do realise we are very fortunate. But if you are mortgage free you do not need as money to live on as you think you do. Obviously if you want brand new cars every year and long haul holidays then you need more money.

An 80k a year income would require at least £1 million pension pot in a defined contribution scheme.

I am single and retired at state pension age as could not afford to take a reduced pension. My monthly income is now £1500, which is enough for little luxuries such as lunch or coffee with friends and some non essential clothes, household and garden stuff. Any larger items, such as new washing machine or a few days away in the UK, comes out of savings.