Can someone explain what happens when you’re old if...

[Frogsrtak]

You have paid off your mortgage and have no pension but small amount of savings say 20k or similar?!

I don’t really get it...would you have to sell your house? Would you get a state pension for food and bills?

What if you have no pension but 100k saved, do you just live on that with your stats pension? Probably obvious things to most but I’m not sure how it works! I’m hoping to always save 1k a month from now on (I’m 38 with no mortgage but also no pension). Thanks

I think if you had savings in the bank you'd have to use them. But then, under current rules, think if you had no state pension entitlement you'd be able to claim whatever the lowest level of benefits is (income support?) If you couldn't get or stay in a job. Hard to get hired in your 70s. If you were still in a job and were physically capable of doing it, you'd probably have to carry on with that instead of retiring. Don't know about house ownership.

Do you mean, when you are retired, but living in your own home
or
If you have to go into care ?

If you are able to save £1K a month, it makes a LOT more sense to pay into a pension scheme. That way, your employers also put money into the scheme to add to what you are putting in.

Please look into this some more.

You would get a state pension if you have worked and earned enough. If you have paid off your mortgage you could downsize and spent the rest to top up basic state pension.

If you don’t own your house but have savings you would have to use your 100k to pay rent until it was below a level enough to claim housing benefit. And live off state pension.

As this currently stand you would only be made sell your home to pay if you needed care.

Thanks not talking about care costs just general living. So better to put 1k in pension than just save myself?

If you can save 1k a month you can do savings and pension.

State Pension

Assuming you are working, if you are not paying into a pension you are paying money unnecessarily to the tax man as there is tax relief of contributions. If you are employed and not contributing to a pension you are also wasting your employer's contribution, so that's a lot of free money wasted.

One way of thinking about it is that pensions are just long term savings within a 'tax wrapper'. Currently they can't be accessed until at 55, so a considered investment for the future and the earlier started the better (due to the cumulative effect of investments). The state pension is based on National Insurance contributions. It is not means tested (at present) and payable to all those who draw it at state retirement age. You can request a forecast to check whether you are on track via the gov.uk website.

With regard to owning a property in retirement, I think the entitlement for other state benefits precludes those with £16k+. Properties can, of course, be sold to downsize but with up to 30 years retirement to fund the money may not go that far. In other words, it makes sense to plan for a long life.

Everyone who has paid in national insurance contributions for enough years gets a state pension when they get old enough. Some people are entitled to a government top up, pension credit.

I'm not expecting there to be a non means tested state pension when I get old enough to claim.

You can also defer claiming your state pension and get a higher rate when claiming five years later (for example if you want to keep working at state retirement age, and live off your salary a little longer).

You can also defer claiming your state pension and get a higher rate when claiming five years later (for example if you want to keep working at state retirement age, and live off your salary a little longer).

Though, as the OP is only 38, I hate to think what retirement age will be when she gets to it.

I am mid 50s. When I started work (and for many, many years after that) I was expecting to retire at 60. Now, however, I can't pick up my pension (nor bus pass ) until I'm 67. I can't see it staying at that age for the next 30 year though. so OP would be looking at working into her 70s anyway.

The money you put into your pension is tax efficient. So if you pay £1k into a pension, the tax man will give you a little bit more than £1k, That automatically makes it a good idea. But given that you are really young and don't have a mortgage you might want access to your savings, so you could look at having an isa, for example, and paying some of that £1k in there so it's handy and earning interest while the rest goes into your pension.

That's assuming though that when you say you don't have a mortgage, you do have a paid-for house. If not, I'd prioritise housing rather than pension/retirement saving.

With 20k plus savings you would get no help according to benefits guidance.

But I stupidly paid in late to a pension due to circumstances so its worth nothing when I retire, so do I work until I die? I part own....

Check the Government National insurance site. They give you a rough forecast of your pension as a starting point.
Benefits are for those in need and may not be in place in the future?

You can check your state pension forecast and, if you have missed some years, top up your National Insurance contributions.
I get my state pension now nearly 700 a month. I think others above are suggesting you also pay into a private pension which you might be able to get earlier than the state pension age.

Forgot link
www.gov.uk/check-state-pension

Are you in the UK and have you always lived here? The way you phrase your question makes it sound like you've not heard of something that's common knowledge like Post Offices or the Royal Family .

Most people are entitled to state pension from age 67 (currently), due to NI contributions from working, child benefit entitlement, or some benefits also include NI credits. This is up to about £7-800 pm, so will cover the basics for someone if they own their house outright.

If you have no or minimal savings, you can get pension credit on top. If you have savings above a certain amount, yes you can just use that money to supplement your income. But yes, at your age if you can afford to save for a private pension, that's a good idea due to the tax relief.

Maybe have a read about what MSE say about pensions.

You can have a look at the government gateway site online and this will tell you how much state pension you'll be entitled to depending on your national insurance record to date. (Have your NI number ready). The good news is that you have time to improve your contributions if they aren't great so far.
Any private pension you have will (at the moment) be paid out on top of your state pension. If you have £1k a month earmarked for one pension/savings, then I think it is worth investing a couple of hundred into getting some good advice from an IFA. If that's not possible then a pension fund such as Vanguard is fairly straightforward to start up, its the 'plug and play' version of a pension scheme - tell it what year you expect to retire, tell it how much you'll be putting in each month, then let it do its work.
As far as the unmortgaged property goes, if you have state and private pension it may not be necessary to sell the house. However, many retirees with only state pension do downsize to a smaller property and they either buy an additional property to rent out and use that income to supplement their pension or they simply use the lump sum to top up their state pension each month (not terrible financially efficient but some people just like to keep it simple).
MIL does the latter, and reckons her top ups will last her until she is 96 - by which time, she says, she'll be content to live the quiet life. She appears to spend most of the top up on Laithwaites deliveries, sweaters from Edinburgh Woollen Mills plus the odd tai chi class.

@Frogsrtak

You have paid off your mortgage and have no pension but small amount of savings say 20k or similar?!

I don’t really get it...would you have to sell your house? Would you get a state pension for food and bills?

What if you have no pension but 100k saved, do you just live on that with your stats pension? Probably obvious things to most but I’m not sure how it works! I’m hoping to always save 1k a month from now on (I’m 38 with no mortgage but also no pension). Thanks

Anything you'd be entitled to today, may well not exist in 35+ years time.

Currently, if you owned a home, had savings but had no income, you'd be entitled to pension credit, to get you the equivalent of an income of the state pension.
That in turn would pay your council tax bill.
So you'd then be living off this and savings. Plus any disability benefits you had (if any).

Reality is we've all been required to get a pension, but many will find if the current system remains in place this will mean we have to pay council tax and only just be over the threshold and not receive pension credit but also have not had the benefits of the additional income when younger so screwed both ways, if you don't end up with a substantial pension.

OP I’m 44 and I think the state pension either won’t exist or will be piss poor by the time I get there. No way am I handing over my extra money.

I started a couple of threads about pensions. I’ve been pondering a lot. I’m putting more into my own savings than pension, which tbh I’m still going to keep to a minimum. The constant rule changes for pensions...it’s a worry.

As I said, with 1kyou can easily find both.

@AcornAutumn

OP I’m 44 and I think the state pension either won’t exist or will be piss poor by the time I get there. No way am I handing over my extra money.

I started a couple of threads about pensions. I’ve been pondering a lot. I’m putting more into my own savings than pension, which tbh I’m still going to keep to a minimum. The constant rule changes for pensions...it’s a worry.

As I said, with 1kyou can easily find both.

People keep saying pensions won’t exist etc. when they get to pension age, but this is just a rumour with no foundation. I think some people use it as an excuse not to save into a pension, but we all need to save for retirement if we can.

My neighbour lives on state pension only and she’s existing, not really living. I don’t want to spend 30+ years of my life like that!

The state pension will not exist in its present form when op retires. The government has made it quite clear in recent years that people need to take out private pensions/fund their own retirement and only the very needy will get enough to live on from the state pension (not thrive by any means). If you have 1k a month spare, I'd put some in a private/company pension and some in a stocks and shares ISA. Don't forget that you situation might change in the future and this spare cash might not be available.

“ People keep saying pensions won’t exist etc. when they get to pension age, but this is just a rumour with no foundation. I think some people use it as an excuse not to save into a pension, but we all need to save for retirement if we can.”

Huh? It’s not a rumour I heard, it’s the way I see things going, imho, which you’re free to ignore.

People who think like me are more likely to be saving for later life, not less!

You should talk to a financial advisor or even go onto MoneySavingExpert or a similar site. £1k a month savings could go into an ISA or similar to gain tax advantages and further boost the pot.

You say you don't have a mortgage - does that mean you own your home outright? If so you are very lucky. In any case I'd be looking to buy a home if you didn't already have one or buy a second one to rent out to extend your future income.