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.

Sorry I should have said Guaranteed pension credit.

@countrytown

Free tv licence? Please stop spreading this falsehood.

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

It used to be free for all over 75 s, but now it is only free for over 75s who are on very basic pensions, ie state plus pension credit. And it’s not means tested, it’s the same cost for everyone.

Equity release rules changed so they are not so punitive. And as I said upthread if you have no dependents it doesn't matter if there is nothing left.

It used to be free for all over 75 s, but now it is only free for over 75s who are on very basic pensions, ie state plus pension credit. And it’s not means tested, it’s the same cost for everyone.

Sorry by means tested I meant the poorest still got it ie the ones who get pension credit. I don't see the problem in paying for it.

@countrytown

Equity release rules changed so they are not so punitive. And as I said upthread if you have no dependents it doesn't matter if there is nothing left.

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

@Whammyyammy

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

Don’t forget you will be paying income tax on that. Normal allowances, then the rest is treated as if it was earned income.

I agree OP, it'd be very difficult.

Unfortunately, you won't get very much understanding on mumsnet.

Many of them seem to have a lot of insecurities, so they'd prefer to say it's your problem, or for xyz they've made better life decisions. I suppose it makes them feel better (temporarily).

We its £180 a week isnt it? During covid, thanks to job losses and slashed hours dp and I lived on that between us and managed fine. (( having no mortgage helped massively))

£35 pw week council tax
£20 pw gas and electric
£6 pw broadband
£5 pw water
£1.50 pw giffgaff sim ((£6 a month))

We rounded it up to £80 to account for variables. That left £100. £35 ish went on food, we eat really well and im great at making a meal from nothing which helps. £10 each for the odd coffee or whatever..... I rarely spent mine as im happy with a fladk of tea and a walk on the beach.
What was leftover went straight into savings in case it was needed.

It was very doable, not glam but you cut your cloth....... Portioning off money means you always have savings and money to fall back on. When our freezer died we were able to replace it that day and even had the odd takeaway and day out. Whatever your income it isnt a bad way to manage money and you dont feel youre missing out as what you need is always in reach.

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

You can't owe more than your home,

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

I'm not sure what you mean?

Let's say MIL borrowed 50k on a house worth 200k.

She took the 50k as cash.

When she died the house was sold and we paid back the loan which, with compounded interest added, came to 100k. We then inherited the rest.

You will never owe more than the value of your home and, in most cases, there will still be something left over for your family to inherit.

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

It doesn't really work like that. It's like buying an annuity in the sense that the provider is taking a gamble on your life expectancy. In both cases they hope you die young, in which case they win the bet. If you don't they'll be out of pocket. In both cases the risk is based on actuarial calculations. When averaged out over a large number of transactions they'll make money, even though they'll be unlucky on some.

@nokidshere

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

I'm not sure what you mean?

Let's say MIL borrowed 50k on a house worth 200k.

She took the 50k as cash.

When she died the house was sold and we paid back the loan which, with compounded interest added, came to 100k. We then inherited the rest.

You will never owe more than the value of your home and, in most cases, there will still be something left over for your family to inherit.

Maybe I'm just not understanding it. What if someone takes the 50k cash and lived a lot longer and the compound interest added up to 150k, what happens then ? Sorry if I am being thick , but if someone took equity release at 70, they could live to be 100 and paying interest all that time?

Maybe I'm just not understanding it. What if someone takes the 50k cash and lived a lot longer and the compound interest added up to 150k, what happens then ? Sorry if I am being thick , but if someone took equity release at 70, they could live to be 100 and paying interest all that time?

It doesn't matter. The mortgage company would get the house and there would be nothing left over for relatives.

And they won't be 'paying interest' all the interest is added to the original loan. They would pay nothing in their lifetime.

My granny lives off her state pension. She’s 90, she qualifies for pension credit and because she’s on her own she also gets council tax discount.

She rents her flat so that’s probably her biggest out going, her rent is more than my mortgage! She doesn’t really go anywhere, no holidays, no going out all the time for meals and coffee etc. Her son pays her phone/broadband bill for her and she lives quietly.

@saraclara
You are right, I am. I did my own forecast and Assumed everyone would be the same if they made the contributions. I had a few missing but paid them.

@Linnet

My granny lives off her state pension. She’s 90, she qualifies for pension credit and because she’s on her own she also gets council tax discount.

She rents her flat so that’s probably her biggest out going, her rent is more than my mortgage! She doesn’t really go anywhere, no holidays, no going out all the time for meals and coffee etc. Her son pays her phone/broadband bill for her and she lives quietly.

If she's on pension credit, I thought she would get her rent covered fully by housing benefit?

Yes, lots of people live on a state pension and I expect to myself.
My mother did and most of the older generation of my family did.

I'm in my 60s and would have normally retired by now but the extension to retirement age means I'm still having to work. However, when I get to 66 I shall be on a state pension.

I don't own my own home, so I rent. Retirement villages for older people do a really low rent rate to tie in with the state pension. In such properties the TV license is only £7 per year and council tax is paid, and bills are a small set amount each month.

I currently lease a car but won't when I'm retired as I couldn't afford to; however, there is the free travel pass and the 'bus stops outside my home so I will be able to get to the nearest market town for shopping.

I already get free prescriptions and help with glasses etc. I have the smallest amount of savings, around £4000 which will be for top ups and 'treats'..... In my retirement I don't expect to be jetting around the world or taking endless holidays, I just expect to be able to walk in the countryside, join in events in the local village, write, do some gardening, see relatives, watch TV. My needs are very small and I don't eat extravagantly either, I shall be quite happy.

It all depends on what you expect from your pensionable years....if it's your chance to do a round-the-world cruise, eat out every week and live the high life, then no, the state pension won't cover it of course....! (But I have done those things in my younger years and don't want to do it again when I am older and retired!!)

If you have money saved in the bank, ISAS, shares or property that counts against you for means tested benefits. However what most people dont realise is that if you legally invest money in things like antiques, jewellery, wine, art etc as these are regarded as your "goods and chattels" and do not count. You can always liquidate such assets gradually (if you need to) and still claim benefit.

@MurielSpriggs

So if you have nothing left and you still owe the interest on the equity release what happens then? Does the interest just get waivered at that point?

It doesn't really work like that. It's like buying an annuity in the sense that the provider is taking a gamble on your life expectancy. In both cases they hope you die young, in which case they win the bet. If you don't they'll be out of pocket. In both cases the risk is based on actuarial calculations. When averaged out over a large number of transactions they'll make money, even though they'll be unlucky on some.

Thanks for explaining.

I work full time and that's more than I have left after rent. Also you don't have to move out, if you do struggle equity release is an option.

If you were contracted out before 2016 -and millions were - you do not qualify for the full state pension unless you make up those years in NI contributions. You can only backdate voluntary contributions for 6 years. That's why it's important to get an accurate forecast.

The advertised maximum rate doesn't necessarily apply even when you've worked more than the so-called qualifying years.

My mum doesn’t manage. Once you go into retirement bungalow on a complex there are management fees. Hers are £165 a month. She gets help as on low income but if you have savings over £16k (I think), you won’t. If you have a security line in your apartment/flat you need a landline on top of that.
Her heating bills are massive as she cannot bear the cold now. I tell her to put a jumper on but it falls on deaf ears. Food bills (she likes wine - also expensive), water, TV licence, phone, insurance maintenance of property. Her roof needs new valleys as there’s a leak. She has other outgoings like chiropodist and Tena pants, all sorts of things you start to need as you get older. Plus a mobile as she feels safer with it. She is very isolated since friends started to die off. So she does what she can to stay busy. She loves to garden and shop. Plants cost money. She can’t afford to treat herself to clothes but she does. She also wants to go on the National Express a couple of times a year to visit relatives. It all adds up. So no, the state pension alone is not enough to have quality of life.

My parents do as do my in laws. Both sets of parents were mortgage free a few years before retirement and had some savings.

@Gwenhwyfar

"Few people get the nominal flat rate.

What you get depends on how many years you worked and paid National Insurance. There may then be additions and deductions."

I knew there could be deductions, but additions? I thought if you qualified for the amount you get for 35 years of working, you get the full state pension and that's it.

Its not an addition its an entitlement for people who would have got more under the old rules if the rules hadn't changed as @Babyroobs pointed out people who paid into SERPS/SSP got a higher pension under the old rules, you pay more when you are working and you get more when you are a pensioner, what they do for people like me who had already accrued more than the 35 years before 6th April 2016 when the rules changed, is they calculate what they would have got if the old rules still applied and compared it with the new flat rate, we then got the higher of the 2 by paying us a protected payment this is what is known as the starting amount those getting more than the basic still pay NICS but their pensions don't increase, those with less have their pensions increased by their NICs/Credits until they reach either the basic or reach pension age what ever come sooner.

For me I had paid in for 46 years before April 2016, I get a protected payment so my pension is higher than the basic , however I also opted out so I get a private pension as well, the 2 together makes my Pension well over £200 a week, my DH who got his under the old rules gets £227 a week for paying in for only 45 years, I would have got more under the old rules as I wouldn't have lost 4 years worth of pension increase. This link explains it.

www.gov.uk/new-state-pension/how-its-calculated