Can anyone live on a state pension?

[whatisforteamum]

I've never had a pension,bought a house on a low income so scrimped and scraped to make ends meet and paid the mortgage with no outstanding debt .Dh put into a small pension over 30 yrs.
We are in our 50s and 60s and feel the thought of living on the state pension daunting.
We do have life savings and I will call the government pension advice line.
AIBU to think the state pension won't cover the bills of most pensioners?
Can anyone survive on just state pension.

@Gwenhwyfar

"How can you not be eligible for full statepension with 50 years contributions? "

Yes, how?

In my case, I was formerly contracted out. The deduction per year is made, even if you subsequently work and contribute in excess if 35 years.

contracting out only ended in 2016 so I suppose it will take 30 years or so for all the affected people to flush through the pension system.

www.gov.uk/contracted-out

Get your pension forecast.

it is easy and important.

The worry for old people is big expenses related to owning their own home and this is why many fall into these dodgy equity release schemes.

If you have no dependents it makes sense to do equity release

I know somebody on a really small private pension. Around £250 or so a month. She assumed she would get a full state pension as she had worked the required number of years. But no. Because of Serps.

Interesting how people keep mentioning free prescriptions

This won't last, they will be aligned will pension age I reckon.

DM gets state pension a small top up from DF (deceased) work pension and pension credit
She lives in housing association sheltered accommodation and does not pay rent or council tax
With attendance allowance she has far much more disposable income than I do and we have to encourage her to spend it as she is always in danger of having too much in savings
At moment trying to convince her to have new carpets as threadbare in places - change her car and go out with friends for lunch more often
It’s difficult as she’s always had to budget so can’t cope with having more than enough

p.s.

The government pages say there will be a deduction if you were contracted out. Have a look and see if you can find how much it will be or how it is calculated. I couldn't.

Why are you worried, if you have life savings then surely this is what they are for or did you have other plans for them ?

@JaceLancs

DM gets state pension a small top up from DF (deceased) work pension and pension credit She lives in housing association sheltered accommodation and does not pay rent or council tax With attendance allowance she has far much more disposable income than I do and we have to encourage her to spend it as she is always in danger of having too much in savings At moment trying to convince her to have new carpets as threadbare in places - change her car and go out with friends for lunch more often It’s difficult as she’s always had to budget so can’t cope with having more than enough

Being in receipt of Attendance allowance increases pension credit hugely due to the severe disability premium ( if they meet the criteria ) which is £67 odd pound more each week. It really isn't a small amount to live off even taking the extra costs of disability into consideration.

@LowlandLucky

Why are you worried, if you have life savings then surely this is what they are for or did you have other plans for them ?

Because people don't usually know how long their retirement will be, and if their savings will run out before they do.

Life savings conjures up tens of thousands but could actually be very little ! A funeral for a spouse can wipe out people's life savings.

For sahms whose husband's earn above the child benefit cap, it's hugely important your dh's allow you to continue to get cb and take the hit on their tax code.

depending on how long you have out it's often not necessary to top up. I topped up a few yrs but then realised I paid since I was 17 & I'm certainly not going to be retiring at 52!

I've done the maths. Yes we could do it.

Mortgage free in our own home me and DH would manage very well on a state pension. I think this is possibly due to our current lifestyle. Neither of us spend any money on anything other than food and bills. We've always led a pretty frugal lifestyle and only buy what we need (by choice not necessity) - so the switch to state pension would be life as usual for us.

I think if you like days out and enjoy socialising you might struggle.

@VestaTilley

If you’re low waged and struggle you may be eligible for Pension Credit (it may be part of Universal Credit now) - Citizens Advice or the DWP pension line may be able to advise.

Millions do live just on state pension, plus your free tv licence, prescriptions and bus pass are designed to give an added boost. Look in to winter fuel payments also.

If you’re still working save as hard as you can now.

If you have paid off your mortgage or have rent covered by HB you should be ok- check you’re both eligible for the full state pension.

If you need to move in to a care home when you’re older you may need to sell your home, but may also be eligible for a council funded care place as you’re low waged.

Pay off all debt before you retire, and keep working for as long as you’re able. Be prepared to live frugally.

Free tv licence? Please stop spreading this falsehood.

It’s £1560 per month for a couple, with no mortgage that is plenty. It’s hard when one dies as it halves.

Millions of people do

@DustyMaiden

It’s £1560 per month for a couple, with no mortgage that is plenty. It’s hard when one dies as it halves.

£1560? Not necessarily, in fact I'd say it's rare. If either has taken time out of work to look after children, or paid only the married woman's rate of stamp when that was a thing, that figure could plummet.

I spent only a very few years as a SAHM, but it's knocked my pension prediction down a fair bit.

Babyroobs
The worry for old people is big expenses related to owning their own home and this is why many fall into these dodgy equity release schemes. The elderly lady next door to us owned her own home but had no disposable income. I remember one day a huge bough from a tree in her garden crashed onto our shed roof. We downplayed the damage as we didn't want her to feel she had to pay for it but she was then so worried about more of the tree falling and injuring our kids who were small that I'm sur she ended up releasing equity to get this huge tree cut back. It's major expenses like that that worry old folk.

Is equity release a problem for the person who takes it out or just for the beneficiaries of their will?

Equity release is simply a mortgage with no repayments. MIL took out an equity release loan in order to move next door to us. When she died the house was sold, the mortgage repaid (with interest) and the rest went to us. The person who arranged it had meetings with both MIL alone and with us to make sure she understood it all and that we weren't putting any pressure on her to do anything. Like any loan it's all good if you understand what you are getting into before you do it.

She lived a comfortable and stress free 13 yrs and was very happy. We might have 'only' got half of what we would have done otherwise but we might have got nothing anyway had she needed care.

I would much rather do equity release than downsize or move out of this area and have told my boys that I will if it becomes necessary so it won't be a surprise to them.

@nokidshere

Babyroobs The worry for old people is big expenses related to owning their own home and this is why many fall into these dodgy equity release schemes. The elderly lady next door to us owned her own home but had no disposable income. I remember one day a huge bough from a tree in her garden crashed onto our shed roof. We downplayed the damage as we didn't want her to feel she had to pay for it but she was then so worried about more of the tree falling and injuring our kids who were small that I'm sur she ended up releasing equity to get this huge tree cut back. It's major expenses like that that worry old folk.

Is equity release a problem for the person who takes it out or just for the beneficiaries of their will?

Equity release is simply a mortgage with no repayments. MIL took out an equity release loan in order to move next door to us. When she died the house was sold, the mortgage repaid (with interest) and the rest went to us. The person who arranged it had meetings with both MIL alone and with us to make sure she understood it all and that we weren't putting any pressure on her to do anything. Like any loan it's all good if you understand what you are getting into before you do it.

She lived a comfortable and stress free 13 yrs and was very happy. We might have 'only' got half of what we would have done otherwise but we might have got nothing anyway had she needed care.

I would much rather do equity release than downsize or move out of this area and have told my boys that I will if it becomes necessary so it won't be a surprise to them.

But can the interest payments not be a problem. I guess it depends how much equity you have in the property.

But can the interest payments not be a problem. I guess it depends how much equity you have in the property.

There are no interest payments, although I think the new schemes let you pay interest if you want to, it's compounded.

There's a limit to how much you can release, and you can have it in a lump sum or as a drawdown income. When MIL took hers out interest rates were around 7% so the end payment was just short of double what she borrowed. I think there are protections in place to make sure you never owe more than the value of the house.

@DustyMaiden

It’s £1560 per month for a couple, with no mortgage that is plenty. It’s hard when one dies as it halves.

You are making the mistake of assuming that everybody gets, or will get, the "new" so-called flat-rate pension.

Not at pension age yet, but we've planned our pensions from a young age. At SPA our current pensions(military, private and state) will pay is £60k per annum.

I couldn't imagine having to rely on statements pension alone

My df does, he is in a council flat and uses public transportation.
He always turns down offers of further support saying he is fine.

Free tv licence? Please stop spreading this falsehood.

it's means tested isn't it so free for some?

@nokidshere

But can the interest payments not be a problem. I guess it depends how much equity you have in the property.

There are no interest payments, although I think the new schemes let you pay interest if you want to, it's compounded.

There's a limit to how much you can release, and you can have it in a lump sum or as a drawdown income. When MIL took hers out interest rates were around 7% so the end payment was just short of double what she borrowed. I think there are protections in place to make sure you never owe more than the value of the house.

Sounds risky to me. I wonder what protections there are because it sounds like if you lived a long time and didn't have huge amounts of equity, you could have the value of your home eaten up by interest.

@countrytown

Free tv licence? Please stop spreading this falsehood.

it's means tested isn't it so free for some?

Free for those on pension credit.