Pension income

[BreakingAndBroke]

Posting for traffic.

I keep seeing articles about how big a pension pot you need to have a minimum/modest/comfortable standard of living in retirement, and the levels vary significantly (pots of £37k, £150k or £500k). Obviously, there are huge variations between £37k and £150k or between £150k and £500k!

If you are a pensioner, what is your monthly income (from all sources, eg. State pension, private pension, widow/er's pension, BTL income, businesses or jobs, interest on savings, stocks, shares etc) and how much in non-pension savings do you have?

And do you consider yourself to have a minimal, modest or comfortable standard of life?

https://www.thetimes.co.uk/money-mentor/pensions-retirement/private-pension/pension-pot-amount-average-uk-how-much

I don't think I'll have a comfortable retirement on any less than £80K a year (as a couple). We like to eat out a lot and go on holiday and general bills have gone up. My friend could live on a third of that as she is a home person, likes pottering in the garden, eats in a lot so everyone's different. Appliances will need replacing, there'll be home maintenance stuff, possibly carers and other help needed in the future. None of it cheap.

Following this, I’ve seen the articles too and they use a guideline aligned to your earnings but by the time I retire I’ll be mortgage free so that seems odd.

As Turmerictolly said. It's really dependant on what you see your life looking like in retirement. What your predicted expenses might be etc. There is no set amount that someone needs.

If I had multiple income streams, I'd be looking to retire early! I wouldn't be working till 67 (which I will be) to have more money in retirement. So that's a factor too.

Amongst the people I know, most are done with big trips and going out all the time by around 72. Either due to health issues or just generally wanting a slower pace of life. I don't doubt there are some people still on the go at 75+, it's just not something I have personally seen and I doubt I will be like that. So I'm not factoring in needing huge amounts for holidays and social stuff. But if that is your norm, then your view will be different.

I work with lots of elderly clients and health issues are quite rife once they get past 75 with some exceptions of course. You need more when you are in early retirement that is for sure.

I haven’t retired yet but will have a total income of around £2000 net pm (in today’s money) in full retirement at 67 and at 60 I will have around £1150 so to reach the target £2000 pm I will need £71000 to bridge the gap. That’s the plan.

I think £2000 will be plenty for me.

How big is your pension pot?! The article says that a pension pot of £500k will give you an annual income of £20kpa, so presumably you (& your partner) are aiming for a £2m pot?

Or am I reading this wrong?

We have defined benefit schemes which should be worth around £60K combined at normal retirement age plus a full state pension each - around £22K. That's gross income so we'll be taxed. Around £5K a month would be good. we'd like to retire earlier which means the DB will be actuarially reduced so we might top up from savings if needed. Also banking on more active years say 63-70 then more home based. We have been lucky enough to do a lot of long haul travel when much younger but there are so many places still to see and things to do but time is dwindling now.

I have no idea how much I need and I will just adapt my lifestyle to whatever I have. I find it really hard to envisage. My life in retirement will be very different. Currently work long hours so limited time to need to entertain myself. Currently no health issues which get to be expensive later on. Will not have a mortgage to pay or need to save nor should travel costs be as great.

I know I want my last years to be comfortable and afford paid help and care when needed. I would like to retire earlier than state pension age or more accurately be able to afford not to work should I lose my job before then.

I keep looking at these 'you need to have a pension pot of several squillion to have any standard of living in retirement', but surely - it all depends? If you've paid off your mortgage and have reasonably small day to day bills, then anything else is just jam, surely?

I have only teeny tiny workplace pensions, when I retire and get the state pension I will have approximately £1000 per month coming in. That's more than I get from working at the moment (I work part time). I have a very variable income stream from self employment, which I can continue once I'm retired, but don't like to rely on because it can be SO variable. But I've no mortgage and my bills are quite small. Unless I suddenly take up three day eventing and bi-monthly skiing trips, I can probably manage.

I'm not prepared to disclose amounts but I have a state pension, a reduced due to ill health occupational pension and I work part time on a self employed basis. I'm mortgage free and can finance the things I want to do by and large. Without the self employment I'd have to be more frugal.

I retired at 57 (now 59) taking my DB pension.
OH (56) still working 2-days a week (for the time being and they are stopping soon), they are still paying into a private pension.
Current income from pension & work around £38k (no mortgage or debt).
We have ISA's, PB's, shares etc but are not actively looking to save any more (income from these not included in the above figure).
We both have DC pensions which neither of us have accessed yet (each pot is only worth about £100k) but will probably look to draw these down by SPA.

We both worked hard and think we deserve to enjoy our early retirement, our pensions & savings make us financially secure which is what I think concerns most people nowadays.

I actually have a fairly small income from my pensions ( 2 work related ones and State), less than £2000 but I started saving hard for retirement 15 years ago when I paid off my mortgage. I live alone since my divorce so only need enough for one person.

So, in addition to my monthly pensions going into my bank account, I have another pension pot (£300,000) untouched which I will draw down from as necessary. I also have various investments such as a couple of ISAs, savings account and shares portfolio managed by a FA - which I’ve been dipping into since I retired at 60 for large purchases like a car, new roof, new kitchen etc.

I was quite happy with my funds and was expecting them to last my lifetime but was prepared to downsize if necessary to acquire additional funds later in life, then my mother died and left me a decent inheritance which I was not expecting. I will be giving most of that to my three children over the next few years as I don’t really need it.

As a younger adult, I did not think overmuch about retirement funds, we lived through some tough times in the 1980s and almost lost the house when the mortgage rates went up to over 15% so I am very grateful that I was able to save in my 50’s once the children had left home.

For homeowners, it is possible to live a comfortable life on state pension alone, with a small savings pot for emergencies.

Surely, the biggest factor in calculating the amount of pension you need depends on if you have to pay rent.

For homeowners, once the mortgage has been paid off other household bills are relatively low and you no longer need anywhere as near as much income.
For someone who rents, nothing changes.

I'm not suggesting homeownership/renting is the only factor. Lifestyle does come into it and if you want to continue enjoying sky tv, gym membership and going to costa coffee a couple of times a week then of course you need to factor that in. But that is peanuts compared to finding the money to pay the rent.

I’ll have about £60k PA from my work pension and about £1m in property by retirement age so I should be fine . I’m not counting on anything from the state!

I don't think it's ever possible to work out how much you need on the basis of what another person has.

My best friend and colleague retired just before me and we have similar pensions. But she has a larger house & garden, a car, three pets and enjoys foreign holidays. I no longer drive, don't have pets and all of my holidays are family visits within the UK. So, of course, she has a different level of spending to me.

Having had a job where I wore a uniform, I am finding that I spend more on clothes than I used to, but am pleasantly surprised that I don't seem to spend significantly more on energy costs now that I am spending more time at home.

Only you know what your expenditure is likely to be . . .

I'm late 40s so starting to take this very seriously but still have some time to save. Its depressing to see how small the difference is between having a £37k pot or a £150k pot (£1007 per month vs £1341 per month) I should have around £300k pot by retirement if i keep going full time until 68yrs...... not sure working full time until state pension age is worth the sacrifice. Would like to go part time in my mid 50s (once mortgage paid off) even though it means putting less in to pension. I probably need a financial advisor!

I've got a public services pension which is good but I'm not really sure how much I will have each month, but I would be mortgage free so hopefully wouldn't need a huge amount. At the moment the majority of my money after bills is spent on my teenagers so if I'm just supporting myself I don't think I would need a huge amount of money. Enough to maintain house and replace things that break. Also as both my sons are unlikely to live locally due to the careers they have chosen I would like enough money to visit them every other month and stay in an air b n b and take them out for dinner. I'm not too bothered about big holidays any more as I have done a lot. I'm not sure what the figure would be for all of that.

For someone who rents, nothing changes

That's not strictly true. I rent from a HA and my rent would be covered by benefits if I was on state pension alone. For private renters, it would be more tricky. They could still get benefits for their rent but it may not be enough. That said, there are over 55's housing schemes with rents that are within the allowances. They're also easier to get into than generic SH, due to the age limit.

The people who would struggle are those private renters with too much of a pension to get any additional benefits, but not enough to cover their costs. They will be in trouble.

It's one of the big reasons I always say people need to look at their own circumstances and not just blindly think that a smallish private pension is better than none. There will be a group of people for which that isn't true.

State pension, small private pension and quite a lot of investments that give me extra income. It doesn't all have to come from pensions. I thought of topping up my pension from savings, but I could get higher income from keeping it in savings and have easy access to the capital if I want. Annuity rates always seem really low.

The numbers in that article seem low. Certainly lower than the predictions my pension provider is giving me.

State pension, one (small) private pension plus our family SIPP which owns a tenanted commercial building and holds a decent amount of cash which has built up over the 22 years the SIPP has been running. Right now, we're still working while we try to figure how we can retire from our business without closing it down. Holidays seem like a good idea but there's not much scope for this summer.

Is this a genuine post , you don't need £80k a year for holidays , house maintenance and eating out!

Thanks for that. I'm off to reassess what I need now.

You mean annually not monthly for those pot sizes.

@DragonFly98 , genuinely baffled by your post. £80K a year is around £5K take home per month (to live on as a couple). As I've already explained, it depends on what lifestyle you would like surely?

I've already said we like to eat out a lot (and would like to continue to do this as we live in a place with many great restaurants) and take holidays which will increase once retired. I wouldn't say that is an excessive monthly income for two people who want that lifestyle. It certainly won't be enough for us to take several long haul holidays a year @£10k a pop and go to Michelin starred restaurants which is what we'd like to do. Friends of ours live this lifestyle and you'd need a lot more than £80K. Other friends have simpler lives and hobbies so don't need to spend a lot. On top of leisure stuff you still have bills and house maintenance, possibly a car to pay for.

It's all a matter of choice and cutting your cloth if you can't afford it.