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 left the civil service with £135k pot equivalent and took home around £700 per month - that has increased being index linked (nicely lately!). Not reached 67 yet, but will get state pension on top.

The predicted annuity rates are just rubbish and actually run for the benefit of the industry, like most of the pension industry.
300k at 67 will give you 15k a year just depreciating the capital until you are 87. High pay interest accounts as it depreciates will give you another 5 years on your 20. Taking you to 92 with an income of 15k. They will make it confusing and through their expert investment strategies give you around 9k a year for life. Their expertise benefits you if you get to about 112. If it wasn't for tax relief, which is basically a public subsidy, most pension investments wouldn't even beat best saving rates.
How much you need is completely dependent on your circumstances and expectations of what you want to do. Not what anybody else says.

I always assume a lot of the you need fifty squillion in your pension pot articles are written at the behest of pension companies.

The main things are whether you still have housing costs and are single or in a couple.

Singletons with rent to pay would be squeezed if their only income was the state pension, even if the got some element of pension credit/housing benefit. A mortgage free couple OTH should be able to pay for their essential bills & food.

Private pensions can pay for a nicer lifestyle, cars, meals out and holidays on top of that. I'm just not sure that you need millions & millions. DH and I are fortunate to have a mix of public sector and private pensions and our disposable income is likely to be higher as mortgage free pensioners than it is currently.

We have a comfortable life on about £40k. Help out our grown up children occasionally, treat the grandchildren, have the odd holiday and everything we want on that figure. We do have share investments and savings as a buffer too, should anything go wrong in the house or if we need a new car at some point. If you're mortgage free I believe that figure is plenty. As for the poster saying £80k, as public servants we never earned that amount when we were working!!!!!

Im really bad at paying attention to this kind of thing TBH. I'll retire with a 30 yr NHS pension and as a home owner (who naturally lives cheaply) I think I'll be fine!
I def dont need a pension pot that pays me 4 times what I earn now thats for sure!

You sound a lovely person @RosiePH but is all that really your responsibility and is it something you should be worrying about 15 years before it might or might not happen.
Maybe time to think more about ensuring there is no expectation you will be funding their refusal to shop in Aldi and your obvious compassionate nature is directed more towards your children. Though the pension industry do invest heavily in getting us all to worry about our future inability to fly around the world when retired, so I can see where you are coming from.

It’s so individual. A lot of our current income goes on mortgage, school fees and savings so it’s not a good guide to what we’ll need in future. I do think it’s helpful to have a rough idea how much income your pension savings will generate.

We are aiming for (real terms) £100k as a couple pa. This will be a mix of income from ISAs, two pension pots, a small defined benefit scheme and two state pensions.

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

It really isn’t. If I was single my state pension would barely cover essential bills and food. I wouldn’t be able to run a car, eat out, go on holiday or do any of the life enhancing stuff that makes retirement pleasant.

I’m not sure about the 72 bit if you are in decent health. My parents and aunt are about 75 and are still travelling hugely to places like Japan, India, walking holidays in South America. They’re hoping to get another 8-10 years of that kind of travel before they slow down

My parents had their last foreign holiday when they were 94 and 96! They were having two or three holidays a year throughout their 80s. I have every hope I’ll do the same.

If you are retired there are plenty of opportunities to reduce costs that you can not do when working. Out of peak travel and last minute bargains, more time finding best deals on services etc, home cooking and DIY, free or off peak social events, completing all the offer forms to get rewards and freebies, it goes on. Then there are all the costs of being at work like travel, clothing, eating meals on the run, contributions, paying for work on the house or garden you don't have time for, restricted peak times for travel and entertainment, that goes on too. Even running an additional car or one car might not be needed with your extra time to plan public transport.
Pension industry never quantifies these when they say what you might need in retirement but they are significant.

Depends how much you earn now too
I've no hope of 80k a year pension when I earn a quarter of that, so it'll be state pension and whatever tiny employer one I have

In my experience the best advice is not to work until you have enough to fund a dream retirement but work out what you need for a contented secure retirement and work to that. Because so many people never get any retirement, many no retirement in health that enables the dreams to be fulfilled and for many the big dreams aren't that great anyway.

Thank you for your reply. What do DB, DC, PB and SPA mean please?

I'm hoping to have enough for about three years of fun post retirement and then after that, I'll just need enough for the roof over my head, wine and good food in the fridge, several media subscriptions, a trip to the garden centre a couple of times a week and a bit left to spoil my family, which if DC are to be believed, will mostly consist of grandcats. That'll do me. I have no intention of turning retirement plans into the next capitalist stick to beat myself with.

this is an interesting topic and one which is at the forefront with us at the moment as we edge towards retirement - well in 14 years for me and 10 years for DH.

We should get around 35k pa in state pension - UK and abroad-, £20k pa private pension and will hopefully have around £10,000 pa bond interest depending on how they perform.

Our mortgage will be paid off by then and so living costs will be much less than they are at present.

I avoided the 'private pension' route as the returns didn't seem good enough for the value of the investment.

Our current income is around £7k a month net. However we have a mortgage eat out regularly go to the theatre concerts etc and raise 7 children on that including 3 holidays a years and several short breaks. I just can't see how we could spend £2k less for just us a couple with no mortgage, and we plan to travel and generally enjoy our retirement.

Pfft. How the hell are you going to pay the butler and chauffeur on that piddling income?

I don’t get why people are being funny about wanting 80k in retirement. It’s only 40k each. We both have good DB pensions. Mine will be 45k plus state pension. My DP’s isn’t quite as much.

We plan to spend plenty on holidays, weekends away, meals out etc. I don’t want a retirement of sitting in front of the TV all day. We all want and aim for different things.

Sorry, these are normally widely understood abbreviations on the money/retirement boards 😆
DB-Defined Benefit (pension).
DC-Defined Contribution (pension).
PB-Premium Bonds.
SPA-State Pension Age.

Yes most people do but everything mentioned doesn't cost £80k a year. I don't understand how you can earn enough to have that high a pension, while simultaneously being so poor at money management.

I get £900 per month and a lump sum of £67k. I had to flexi retire from the NHS
because of Long Covid so still work 1-2 shifts a week. I’ll have to do this until I’m 67 and the state pension kicks in, god knows how as it’s exhausting already.

I don’t know what any pots were worth, and I was widowed last year, but with my state pension, my civil service pension and my DH’s (private) pension “survivors benefit” pension, I clear (after tax) about 36k a year.

Along with a good amount of savings finally getting a better interest rate.

I do pay full rent though (social housing of £900 per month).

I manage ok though. 🙂

Thank you - I've got another 26 years before I retire so lots to learn! I appreciate your reply 😊

But we will spend around that much! We ski, holiday frequently, have gym & tennis memberships, pay for private physio etc. How do you know what we’ll spend?