Is anyone going to be living just on state pension when they retire?

[Shinyseas]

It looks like I will be. Never really earned enough to put money aside for a pension, married someone who was terrible with money and at the age of 51, have youngish DC so even though I’m earning better money now, I’ve got to get them through teenage years, then off to Uni. All feels too late to save anything decent. I’ll be early 60s before my youngest leaves home.

When I checked this week, my private pension is set to give me 1.5k a year 🙁

People do survive on the state pension I know - but it must be very very tight.

Well the Government has run the forecast and state pension could run dry by 2033 due to number of workers paying NI vs number taking pension. Of course that is why they kick started the auto enrollment scheme to make sure ppl having a pension and take it seriously.

I doubt that the state pension will just stop but the fact is at some point either NI contributions go up or the amount of pension received goes down to ensure it can continue. Not to mention more increases to the retirement age.

Its a very big risk, especially for younger generations to have a mindset of just live off the state pension because goalposts are and will move.

Don't forget you may qualify for Pension Credits & if you get them you may be entitled to housing benefit if you rent & Council Tax Benefit. Also if there is anything wrong healthwise be sure to claim PIP before you retire because once you reach retirement age you would only get Attendance Allowance & miss out on the Mobility entitlement.

I think this was done here a few months ago and it got quite heated, but good to see this thread has advice and maybe some warnings. I too have a small private pension, £2.5k a year currently (index linked?), and around £30k in savings. I'm 60 now and I still work part time but already draw the small pension as my kids are still at uni/one disabled is housebound it helps to have the top up on my salary. I still Iive with H but not sure if that will continue, we still pay a mortgage each month. I think in retirement as long as your housing is paid for e.g., mortgage paid off or low rental costs/benefits to cover it then you are ok. But if you are looking at private rental 65+ then you should get advice and help ASAP.

What sector do you work in OP? Could you try and get a job in the NHS/Civil Service/a University who typically have defined benefit or higher employer contributions. I know you want to support DC with university, but don't do this at the expense of your entire retirement

Just to add, I don't know what you do or how much you earn now, but if for example you were to work in an nhs band 4 admin job from now until retirement at 67 your NHS pension would be worth around £8,000 per year, whereas you'd have to be putting around £600 a month to get a similar annuity on a private pension

What are your outgoings OP?
You won’t have to fund your children once they are earning.

Your work expenses won’t be there.
Do you need to run a car? Sometimes public transport and taxis are cheaper.
Work out what you need to live on, and what you need to do to address the gap.

OP, you have 17 years to save into your pension before you hit retirement. And don’t forget the extra tax contributions that get added, topping up your investment by 20%.

Presumably your employer makes a contribution?

What is your housing situation?

The main worry would be the cost of council tax and utilities, which would take a disproportionate percentage of a low income.

However, many pensioners on a low income will get help with the cost of council tax and housing benefit if renting. Eligibility to pension credit is key I believe as this is the gateway to the extra support - even if the PC entitlement is low, it's worth it if you then get a council tax discount and free TV licence for a start.

If you own your own home, you may have the option of downsizing to reduce living costs or equity release to top up your income.

But never assume it is too late and don't do/pay too much for DC while leaving yourself worse off. They'll be the ones who'll benefit financially from going to university (hopefully) so there's nothing wrong with them paying for it. They'll also be able to work while they're there to pay towards their living costs. They also might not even go. Its not right for everyone and there's lots of other options that could lead to a decent career without conventional full time study at 18.

On the matter of your retirement savings, all you can do is review your budget and consider whether all expenditures are essential and more important than retirement savings. You might be able to cut out or reduce some non essential expenditure to free up more money to put into your pension.

hopefully you will still have a free bus
plus if you are able you may still be able to work somewhere

Well I'm 31 so hopefully there will still be a state pension for me.

But I haven't got much of a private pension, no. As a single mum there's always something to pay for. Luckily I am a homeowner so I'm focusing on paying off the mortgage then at least I won't have that cost in old age.

I suppose you need to look at downsizing to something you can afford.
Then live within your means, and that may mean looking for free days out and free/cheap food.

I hope no one is deliberately keeping pension savings low years before they are due to retire. We can’t make plans for future benefit rules based on now!

If you are single and the kids have left home or are in f/t education including Uni you get 25% council tax discount.

Your bills plummet.

No work clothes needed.

Freedom Pass

Eye tests and prescriptions free

concessionary tickets for lots of places.

time to cook from scratch: much cheaper (if you want it to be, based on meal choices, obv).

savings in your pension does not count towards any savings for a means tested benefit threshold, e.g UC, if you need to claim between now and retirement.

Sorry to ask (not being goady) but how does this happen? How can a person with 20+ years or working life not accrue a pension? Doesn’t the employer have to pay into a fund?

Some people have no choice but to opt out of the workplace pension if they're on a low wage and need every penny for bills.

There's going to be millions living on it in a few years. People in their 30s or 40s now that are barely affording to survive are unlikely to be planning private pensions etc.

their retirement age will probably probably be 70 despite pay years of NI.

Freedom Pass

Eye tests and prescriptions free

these won't be free in the future though. prescription age will 100% be increased.

Prescriptions are a red herring because no-one has to pay more than £10 a month anyway and there are many medical exemptions.

I don’t personally feel the state pension is too bad - assuming mortgage is paid off.

it isn’t a fortune of course but I’m not really convinced by the MN view that pensions above all else should be prioritised.

You need to check your forecast for state pension now. I have done 44 years continous work and have still had to top up.

I must admit it worries me. I think that the 380 odd a week we would get as a couple would be sufficient to meet bills. But when one of us dies, the 190 a week for the other to live off isn't quite the same.
We have a house so will probably move somewhere cheaper if we ever make it to retirement age (seems to get further away every few years!)

If the Tories stay in power we'll have modern day workhouses.
I wish I was joking

Having a low private pension can sometimes be a curse. My mum gets£167 a week but because she also gets a small private pension that takes her £3 a week over the pension credit cut off she gets no help with council tax. That small pension has cost her. £130 a month in additional help

Yes, I think I might be in the same position. I’ve never been a high earner and also had a few years out when dc were small. I’m saving as much as I can and if health allows will try and work as long as possible. I’m not someone who wants to travel loads in retirement or anything like that, but having had times when I’ve wondered if I could afford the bus, I know it’s not fun to count every penny.

If you are not prioritising your pension you will be in for a nasty surprise in old age.

The ageing population & the huge burden on the young scares me for the future.