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

@BreakingAndBroke The words you should hear from any financial adviser is "the money you invest in a pension in your first years of work are the most valuable ones for your pension".

As you have nearly 30 years to go, anything you can save now will have years to grow in value.

By way of illustrating this, our DC was signed up to the family SIPP pot with 5% of its value before their 4th birthday, and we made only one contribution of £3,600 on their behalf. Their fund is now worth about £45k, at 25. The SIPP is outwith our estate for IHT, so anything we don't spend passes down untaxed. Their investment strategy for the cash element is very different to ours, because who knows what the world will look like in 2064. However, over every 10 year period since 1929, equity based investment indices have matched or beaten inflation. If you can bear to, it's worth reading up on the subject.

We (DH and I) have effectively been self-employed since we were 35, without any employer pension contributions, so unless we'd made our own provision we would only have the standard state pension in retirement. And as a PP said, even without a mortgage that's absolutely not enough for a comfortable retirement. My DM, now nearly 90, manages the basics of food and utilities on it plus pension credit but needs some equity release from her home (or help) to pay for new specs or hearing aids.

We did some maths, although it’s a way off retirement. My partner and I will have circa 3.5k per month combined in DB pensions and another 1.5k in DC pensions, plus SP. In today’s money.
We will also be mortgage free and use his capital to purchase a rental property in the UK and a home for us abroad. We will keep my property as our UK base. If he dies before me, I have about 3k per month plus state in today money and my home in the UK. I’ve asked that his properties remain in his family/kids.

This is all nice and dandy until someone needs to go into a care home and we’ll have to find the money for that or buy a ticket to Switzerland 😬

You know that holidays, meals out etc are available at different price points, yes?

My husband and I retired early so we are not at state pension age for another 10 years. We live very comfortably (all be it abroad) on our pensions and a rental income totalling around £78k.
This will increase by 2x full state pensions when we reach 67.(We've both purchased extra NI years and have to buy another year each this year)

We were lucky enough to have final salary pensions (public sector) that came with lump sums. So we have no mortgage on either of our houses ,we also have reasonably healthy savings behind us and both hold the maximum in premium bonds.
Obviously if either or both of us require a care home in the future our money will be hugely impacted by paying for this but for now, at 57, we're living our best lives and thoroughly enjoying retirement.

I'm guessing you're asking because you're close to retirement? Otherwise it's pointless.

At 42 I don't expect the state pension system to be functioning by the time I retire. I put minimal in because I don't trust any government. Too many excuses and reasons to not pay out or change things up. My money is being invested in other things and I expect to see a lot more out of it than either state or private pension, plus it's not tied up for anywhere near as long.

I'm planning on having 10 good years on a reasonable salary until 75 then taking it easy.

A lot of my relatives did not get past that age and the ones did have really taken it easy after that.

So 10 years of travel and whatever left taking it easy in the garden and living much more modesty after that is the plan.

Anyone working in the public sector complaining about their pay should come on this thread and see how much better off in retirement they will be than those with DC pensions as I am assuming that the only people who have DB pensions are public sector these days.

Silly question as many pensions don't have "pots" that can be measured in that way. Defined benefits occupational schemes and the state pension to mention two.

Do I have enough? No. Will I have as much as I want? No. Will I have enough to live on comfortably. Yes but it's not all income.

Thanks for this - I had jot heard of junior pensions/SIPPs before, so this is good to know about 🙂

I'm also 42. May I ask where are you putting your money rather than in a pension? I had a stocks and shares ISA, but cashed it in as the deposit for my house, so my savings are pretty much wiped out again now, but I hope to build it up once the kids are older. I've recently upped my pension contributions, but would welcome any other options to consider. Thank you 😊

Really feeling the stark contrast between public and private sector pensions here.

@DragonFly98 you don't seem to understand so I think it is you who are poor at understanding money. For a start an £80k pension will be taxed so it is not £80k take home (as I've explained). I've also explained that this is a combination of two defined benefit pensions plus a state pension. Also, have you heard of compound interest? If you start your defined benefit early and retire 30+ years later then you will have accrued a decent retirement income. People can even pay in additional contributions to boost their pot.

It's very easy to spend £80k by the way. Some people (not me) blow £3k on a single handbag. People spend their money how they like.

I am late 40's and I am expecting State Pension to still exist by the time I am 67. Of course the age may go up again and it may be means tested, but I cannot see any Government completely getting rid of it. Hardly going to be a vote winner!

If you want to see what your investments might grow to in future there are various tools. A simple and free one is guiide.co.uk No need to register, just use the basic version and enter details of your current pension(s) and it will calculate what you may get at retirement.

How much would you spend in retirement, that is hard to know. I am basing on what I spend now, plus growth at 3% a year. With inflation high at the moment that may be unrealistic but assuming inflation comes down, then I think average inflation may be around 3% for my long term planning purposes.

I am single and retired at state pension age as could not afford to take a reduced pension. My monthly income is now £1500, which is enough for little luxuries such as lunch or coffee with friends and some non essential clothes, household and garden stuff. Any larger items, such as new washing machine or a few days away in the UK, comes out of savings.

An 80k a year income would require at least £1 million pension pot in a defined contribution scheme.

My husband is 15 years older than me and retired at 60. I left my job at the same time in the NHS and went part time in a friend’s gift shop up until Covid broke. We live on my husband’s pensions of around £45,000 including state pension plus £150,000 in savings. I can drawn a small pot this year as I turn 55. The plan at the moment is to drawn my NHS pension at 60. We have a really lovely life, eat out regularly, 2 holidays abroad a year, plus weekends away in Uk every 2-3 months. Buy new things for the house and clothes. We are amazed we live this life on the money we have coming in. We also run 3 cars. However my husband does all the house maintenance himself and car maintenance. We decided to both stop work early as we have no children and decided to enjoy life whilst we can as life is too short. I do realise we are very fortunate. But if you are mortgage free you do not need as money to live on as you think you do. Obviously if you want brand new cars every year and long haul holidays then you need more money.

DH and I are both 46 and currently have around £350k in pots between us although I have a small DB scheme from a previous job which would be worth around £200k if it was a 'pot' (around £8k a year salary).

At the moment we're hammering our pensions because we're earning a decent amount but aware as kids grow in the future we may not be able to. School fees kick in this year too.

Planning to take out the 25% tax free lump sum age 57 to repay mortgage. Fingers crossed. Then I would like us to have around £4K a month after tax to live on from early-mid 60s. I think we're on the right track for that.

@fridaynight1 if you pay council tax at around £220pcm, utilities at around £200pcm, and insurances at around £100-150pcm and live alone, there’s not a huge amount left on state pension of around £800 every 4 weeks is there? How do you think it’s easy to live on just that?

I am 62 and have flexi retired from the NHS. I have a pension of 16K pa, another small pension of 5K pa which kicks in at 65 and then the state pension at 67 so at the point of full retirement I guess I will have about 30K pa. DH will have a workplace pension of 40K. We both also have SIPP's which we hope can be passed onto the dc. I'm currently practicing living on a reduced income by saving all of my pension income. I feel very fortunate but we have both prioritised pensions and savings in the last 15 years, have paid off the mortgage and don't live extravagant lifestyles. The one thing we do want to do in retirement though is travel!

We have combined pensions of 35k PA and both have full state pensions. I have retired already due to ill health. Redundancies are a distinct possibility at DH workplace. We have no mortgage and around 500k in savings and investments that are currently making us a decent return, 20k as of last quarter. It cost us 29k to run the house and all expenses last year inc a weeks holiday and a weekend away. DH has been chucking in his pension since I was retired early. We are luckier than many people but if he is made redundant it is unlikely he would be able to get a job in the same field so he would be retiring earlier than expected by about 3 years.

I am 65 and DH is 68. Our income is a combination of state pension, pension credit and PIP. It adds up to about £29k a year and we manage fine on that. We get most of our council tax paid, and we are sensible with heating etc so dont have huge bills. We have Freedom Passes to travel around London and mostly use that to travel rather than pay for petrol and parking. Our dcs help out with some bigger costs (replacing appliances and gadgets) as they've all done well for themselves and like yo treat us.

Our house is owned outright, we have modest tastes and a history of frugal living (our income has been lower than this in the past), we can cook well and economise without feeling hard done by. Our hobbies are cheap - local groups, walks nearby, gardening, seeing family, watching films at home, visits to interesting places (mostly free, lots available as we're in London). We go abroad a couple of times a year (often this is long haul as we have family in various Asian countries - but costs are cheap once there). We eat out occasionally for special occasions (often dcs pay), but prefer to dine at home.

www.retirementlivingstandards.org.uk/

It might be with looking at this to help start thinking about what type of retirement you would like and what that means for savings you need to pay for it

Thats more like it! Nice to see a more realistic post on this, rather than the ones which add fuel to the rumour fire that most pensioners are very wealthy, and have more to spend in retirement than others earn at the height of their career!

I read all these type of threads and still remain baffled by how much I need. I'm 62 and saving as much as I can until retirement and then I'll wing it and pick up p/t work if necessary

I find these posts scary. £80k? £45k? Many people don't earn that much, when working, so how are they going to have a pension of £45k?