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.

But I presume she had savings? When my inlaws had care in the home they worked out how much inlaws needed for bills etc & the fact their home was paid off & worth 1m was irrelevant.

@Gwenhwyfar

"Unless you are having to pay for support for personal care, cleaning etc. Far more likely at 90 than at 70."

Isn't that provided by the council?

Not necessarily, you might get a care package if you have medical needs as well, but if you are otherwise healthy you are likely to have to pay something towards, if not all , the cost of your care be it personal care like washing or dressing, or cleaning/cooking/ shopping etc.

We are an ageing population, we can barely cope with the needs of the current 80++ cohort. Things are only going to get tighter financially in terms of what the state will offer, so the expectation is that support is likely to involve self funding in the future either by using capital or putting a lien on assets such as a house.

@countrytown

I thought care in the home was state funded? Wasn't that Teresa Mays proposal to make some people pay?

Nope. If you have more than £23.5k savings you have to pay for it. My mum’s bill was £600 a month six years ago. Doubtless it’s more expensive now. If you’re dependent on a social services assessment you’ll get the bare minimum, ie not nearly enough.

If you both qualify for the full SP you'll get £360 PW
x 52 = £18, 700 pa.

You already know what your cost of living is. , and how much of that is work-related and stops when you retire ( union subs, pension contributions, commuting costs). Do the sums.

Nope. If you have more than £23.5k savings you have to pay for it.

But if you have savings why shouldn't you pay?

We are an ageing population, we can barely cope with the needs of the current 80++ cohort. Things are only going to get tighter financially in terms of what the state will offer, so the expectation is that support is likely to involve self funding in the future either by using capital or putting a lien on assets such as a house.

I agree with this. It's a huge issue that the government doesn't want to address.

@countrytown

Nope. If you have more than £23.5k savings you have to pay for it.

But if you have savings why shouldn't you pay?

No reason at all. It’s entirely right that you should pay but you seemed to be under the impression that nobody had to.

Sorry I worded my post badly. It's a lot more generous when having care in the home vs going in a home so I meant that a lot of it is state funded since houses aren't used to fund it so there must be a deficit even when some do contribute as they are not necessarily fully contributing.

"you might get a care package if you have medical needs as well, but if you are otherwise healthy you are likely to have to pay something towards, if not all , the cost of your care be it personal care like washing or dressing, or cleaning/cooking/ shopping etc."

I don't get it. If you're healthy you can dress yourself, etc. If you can no longer do that then it's a medical need isn't it, even if it's just natural ageing and not a particular condition/disease?
But then I don't understand why health care is free, but care for dementia isn't when dementia is clearly an illness.

But then I don't understand why health care is free, but care for dementia isn't when dementia is clearly an illness.

I think there are even discrepancies there. Another inlaw went into a home & it was all state funded despite owning a few properties. They were violent & unpredictable though.

I've found the MSE pension board really useful in educating myself about pensions. For the purposes of this thread, the thread below from there may be of interest.

forums.moneysavingexpert.com/discussion/6257477/a-paupers-pension-tale-not-many-nuts-to-dig-up/p1

I also agree with the equity release schemes, as long as you do your research and use a reputable company.

The thought of elderly people living in a mortgage free family home and struggling to get by on a pension is awful! Free up some of the money in the house and enjoy the last few years ... my mum did that and I’m so glad she had lovely lunches out and weekends away.

@Gwenhwyfar

"If you have a full state pension, that's currently just under £180 per week. So £360 per week for 2. "

Is it like that now? The amount for couples used to be less than twice the single person's amount.

Yes it is that now. IF both partners have paid sufficient NI contributions to each qualify for a full pension.

Back in the old days when many married women were SAH wives with no outside paid work, they didn't pay NI contributions. A qualifying married man who had paid enough NI got a state pension for him and a half pension for his wife. Both paid to him.

Another inlaw went into a home & it was all state funded despite owning a few properties. They were violent & unpredictable though

That would be why. They probably got Continuing Health Care funding. The bar’s very high for that.

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

I spent 20 years as a SAHM and I'm eligible for a full state pension. Every one of those 20 years gave me full NI contributions for the purposes of SRP.

@Viviennemary

Some people are in for a shock if they think they can live on a state pension. They cant. Single people who own their own home get the worst deal.. If they have evdn quite a tiny private pension this means no pension credit. And no council tax rebate. And no savings allowed either. Over 23k I think. Which wouldnt go far dipped into for house repairs and so on over 20 years.

Anyone who owns their own home (no rent, no mortgage) has an advantage .

All single residents qualify for a 25% CT discount; it's not means tested.

People receiving Pension Credit qualify for additional CT reduction.

It doesn't matter where pension comes from (private pension, or reduced state Pension), if it's low enough to qualify for PC they still get P.C.

Savings up to 10 K do not reduce. PC. After that its a sliding scale.

My mum did, she was a widow and luckily had no mortgage. She was very careful with money but never really went without. She shopped carefully and would batch cook and stick a jumper on instead of putting the heating on willy nilly. She would however have been truly fecked if a massive bill came in. She even managed a little holiday most years, not the Caribbean of course but a week in Corfu in September.

Does anyone know how much NI you have to pay per month/year? Could it be a £1 a year for it to count as a contribution?

Very interesting thread and prompted me to check my own state pension forecast. I was a little confused as it says I have 39 years of "full years" but need three more to get full pension. I was in a "contracted out" scheme for many years but was also in receipt of child benefit for most of those. Does the child benefit not cancel out the effect of contracting out?

Website did not really explain the value of those "full years". Does contracting out reduce value of year to nothing or some proportion of a year?

Very grateful if anyone knows the answers.

@DustyMaiden

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

Comparatively few people qualify for the full rate. Eg DWP figures for 2019 showed only 44% of recipients of the revised state pension received the full sum.

That's why it's really important to check your forecast, and if necessary make some additional contributions where possible.

@bojo7

Very interesting thread and prompted me to check my own state pension forecast. I was a little confused as it says I have 39 years of "full years" but need three more to get full pension. I was in a "contracted out" scheme for many years but was also in receipt of child benefit for most of those. Does the child benefit not cancel out the effect of contracting out?

Website did not really explain the value of those "full years". Does contracting out reduce value of year to nothing or some proportion of a year?

Very grateful if anyone knows the answers.

Contracting out will reduce your pension by a certain proportion each week depending on your individual circumstances, it does not cancel it out or anywhere near.

Some useful information here for anyone wishing to make additional contributions.

www.gov.uk/voluntary-national-insurance-contributions

Particularly well worth doing if you are close to retirement and are short, you'll get the money spent back in just over three years once retired and everything extra after that is " profit".

My DSis and DBIL have just "realised" at 56 and 57 that they don't have a pension . They have lived the high life for years, whilst DH and I have been careful financially and have always paid max private pension contributions. Now, we keep getting barbed comments about how we will be minted in retirement and will have to help them out.

@adeleh

How can you not be eligible for full statepension with 50 years contributions? I’m not doubting you, just wanting to know.

That will probably be a woman who opted to only pay "Married Womans stamp", a very reduced NI contribution . MWNI never did qualify as her own pension contribution . The intention was that her husband's NI would provide them with a married couples pension (smaller than two single pensions)

www.gov.uk/reduced-national-insurance-married-women

The MW reduced NI option is no longer available, thank god.

@PostMenPatWithACat

I have worked from 1980, 8 years off as a sahm, 10 years contracted out. Gives me 31 years. If I keep going for another 4 years I'll be eligible for the full state pension but each year is worth about a fiver a week and if I have to I'll bite the bullet. My occupational pension more than covers it.

Our advice to the dc is to pit as much as possible into their pensions as early as possible. I transferred 10 years of private pension into the local government scheme in 2013 and overall from 2014 have 20 years service locked into a final salary pension.

I have colleagues in their mid 30s educated to level 7 who refuse to contribute to the pension scheme due to cost and "they might die and never see the money". They give away the employer's significant contribution and tax benefits. It's quite bizarre.

If you were contracted out for 10 of those years you won't receive the full state pension. Please get yourself an up to date forecast and take it from there, you may be able to make some additional contributions.