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 hope to have around 35k per year, including state pension. I'm lucky that my profession is such that I can just work a day a week if I want and earn a good salary, so I don't think I'll have a Final Cut off where I retire.

I'm 41 and am already mortgage free so no costs there. I earn about 50k per year. I'm saving max into my LiSA that I can take at 60, my workplace pension and a private pension (through my Ltd company). I also have a LA and NHS pension floating about. I don't think we'll be downsizing so won't have that money.

I want to have roughly the same lifestyle I have now, at least until I'm mid 70's then I'll prob not want the same amount of holidays/city breaks or to attend expensive social events.

DH and I retired slightly early and have a total DB pension income of around £35k p.a. net of tax, a paid-for house, and no dependants. With the PCLS in reserve for emergency expenses, it allows us to live very comfortably and have a decent amount for travel and recreation. We're used to budgeting within our financial means and it's incredibly liberating not to have to "budget" our time within an annual leave allocation too.

It’s all dependant on what is an acceptable standard of living for people. Someone upthread loves walking and gets to ride a friends horse for free . As that’s what they love doing with their spare time that’s great and it’s cheap. I know someone who has a livery yard and has offered me horse riding for free but I have zero desire to get on a horse, I’m sure some people would be delighted with that offer.

We plan on spending up to 50k per annum. In the first three years of retirement we will be travelling most of the year, just returning for school summer holidays and Christmas. DS and his GF will be living in our house and just covering the utilities and paying the council tax but our home is looked after. We also have friends and relatives in various countries so there will be the odd week here and there of free accommodation. I know my Chinese relatives will insist on paying for everything and it will be a fight to spoil us.

One of my friends who retired recently is buying a yacht whilst another is off in Bali at the moment. I also have three friends who are facing pretty dreadful retirements because they all surprisingly after really long marriages are getting divorced in their fifties. Their retirement plans have been scuppered.

Our plans to retire early were also bought forward due to my ill health, it’s not life threatening but it’s difficult and also the deaths of four friends all before 60. My poor sister was widowed just past 60 and her DH never got to retire at all.

Other than me, 55, and someone in their 40's, every member of my team at work are retired and do 1-2 days a week. It's a very easy WFH job and the hours are so flexible, they can be done literally anytime. It's also easy to take time off for travel or whatever.

That's really my plan. If I'm well enough to still want holidays and go out a lot, then I'll be well enough to work a couple of days a week to pay for it. I'm in a chronically short staffed area in the public sector and that's not going to change. Certainly not in the next couple of decades!

If for some reason, my health stops me working at any point. Well then I wouldn't be well enough to do anything that costs much money anyway.

I live in SH so I won't have major repair costs. Live in London and don't drive and will get my free oyster card at 60. So my outgoings and need for contingency money will be low. State pension + 12-15 hrs work per week, will give me a comfortable life if I am still active. State pension is sufficient if/when I'm not.

I think I really meant rather than actual 'carers', people to come and do the things that I could no longer do, like a gardener and/or a cleaner/dogwalker.

Why is it mad to pay them? But there are also costs of accommodation and bills/food. We've done it twice already but there is a big gap between them and the next two, thankfully!

Sorry, I misunderstood.

Why is it mad to pay them?

Martin Lewis explains this very well on his website. The likelihood is that your kids would never repay the loan fully so it’s pointless.

No I used the wrong word! Should have said 'helpers' rather than carers.

Exactly. Supporting with uni living expenses absolutely, it currently costs me about £8-10k per year per child on top of their loans and not paying fees. But to stump up for the fees when you’re planning retirement doesn’t make sense as per Martin Lewis.

We should get around 80% of our current income.
We probably wouldn’t need to retire 100% that early though as our work isn’t hard labour type, so likely just drop down gradually to less hours and carry on working part time into our 70s

A lot of the 'how much do you need' articles are written or commissioned by pension companies (pension bee is the affiliate link for the one OP has linked). Pension companies aren't doing this for the benefit of their clients; it's for the benefit of their shareholders - more contributions means more fees charged means more profit.

That said, too many people are not saving enough for retirement so these articles aren't bad as such but how much you need is just very personal. You have to look at your living situation (rent/mortgage single/relationship) and what you would like to do in retirement and then you'll have an idea of what you need to save. I'm a little surprised at the vitriol the £80k person is getting as it seems to me that they know what they want in retirement and are doing what they need to do to achieve it - that's a good thing! If you want to do a lot of travelling, theatre, days out, hobbies, eating out, club membership then you need to save a lot of money.

Mine and my DPs pension won't be anywhere near as high as £80k (less than half) and I'd rather do longhaul before I'm 60 (I already find flying irksome and I'm only in my early 40s). I don't know anyone in their 70s flying long haul, they are either too unwell, travel insurance is too expensive due to health conditions or just can't be arsed. I do want to travel but would like to explore the UK and Ireland, maybe a European city break but otherwise I'd be happy in an all inclusive in Costa del sol for a week which outside of school holidays isn't currently that prohibitive (plus I am happy to slum it in a 3*). I don't want to be busy in retirement, I'd like things to do but as long as I have something to look forward to I'm happy pottering around but that won't suit other people.

I completely agree that "are you saving enough for your retirement" articles are written by people who want to make money from you.

For most people it's a balance between their financial commitments when they have young family against saving for a comfortable retirement.

What I would say is that additional pension might mean you can work part time on the run up to state pension age. DH & I plan to take our main pensions at 60. These will pay our bills and live a comfortable lifestyle, eat out and have European holidays, but won't necessarily fund the long haul trips we hope to do. If we work part time we will be able to afford those holidays and add to our savings before we are eligible for our state pensions. I realise these plans depend on our health, but knowing we won't have to work full time and would actually be ok if we stopped working sooner is reassuring.

For us it was easy.
What are we earning now (excluding some rather hefty pension contributions), do we live within our current means (yes), what have we got behind us (savings, investments etc) and what will our income be from taking pensions early (excluding SP as we are both many years away from that).
The figures (more than) added up so we are enjoying retirement a full 10-years before SPA.

We have a couple of expensive pastimes which we can still afford and we are going to be spending a lot of money on the house soon but it all covered so no sleepless nights (just nice lie-ins when Ddogs allow it).

https://www.moneysavingexpert.com/students/should-i-get-student-loan/

That’s not what he says. It’s a reasonable idea for some people, not for others.

‘First, mentally double check that your funds are plentiful enough to easily meet you and your child’s other and future financial challenges.

If so, then mathematically paying in full is best for those who are likely to clear in full what they borrow within the 40 years (predicted to be 52% of university leavers), which will tend to be those who:
– Are consistently higher earners over their lifetime
– Are unlikely to take substantial time out of work before the loan’s repaid (think parental leave, travelling abroad, plans to do further study)
– Have lower initial borrowing (so lower tuition fees or living loan)’

I'm finding this a very interesting thread and it's making me really assess the 'lifestyle' side of things. DH and I are hammering pensions just now, partly to make up for years with less contributions and partly to give us a nice retirement. We live quite frugally (or at least more than others on a similar income) as we have school fees to factor in too. But I don't want to forego holidays and experiences now when the kids are at a good age for it to fund retirement when we may not need that much after the age of 70 especially as we're not flashy people. It really is a balance and it's tricky as none of us can predict the future.

I'd be wary of thinking you won't need so much after you're 70. I'm finding that as DH is no longer here to keep on top of house maintenance and do many of the bigger jobs himself, it's a significant expense I hadn't fully appreciated. It also costs a lot more than I anticipated keeping up my own health. For example I could get by with NHS hearing aids but I wouldn't be able to cope in groups of people, so I'd be completely isolated if I didn't pay for more sophisticated private ones. Luckily I can afford these things but it means foregoing things like the travel I'd hoped to do while I still can.

Good point @MontyDonsBlueScarf . People tend to think of all the envious stuff; travel, meals out. They forget ageing carries more significant care and health costs!

I'm not very well up with my understanding of "pots" as I have a (small) defined benefit public service pension. But from my limited knowledge £1k a month seems MASSIVE from a £37k pot. Where are you getting that from? My OHs pot will be about that size so he needs to do this!

I suppose that's what I mean as you just don't know what your life or health will be like after age 70. My mum and partner are early 70s and although huge lovers of travel and in good health, Covid put a spanner in the works for them as they had planned those years for travel and now just seem content on UK holidays with the dog they've since bought. My dad and his wife haven't been abroad in years and have huge pensions. So it has made me think that perhaps all those cruises think we're going to go on, may not happen. Factor in climate change too. I wish I had a crystal ball.

Exactly! @DragonFly98 is the ignorant one, thinking just because she won’t need a certain amount of money, the rest of us won’t either. It’s such blinkered thinking. We all have different expenses & expectations of retirement. A shame we can’t share our own thoughts without being insulted.

I'm not at retirement age yet, but I have a LGPS pension that is set to pay about £25k pa at 65, I'll have a full state pension on top of that and I have a private pension that is forecast to pay about £8k pa. Should be about £40k pa in today's money. As I'm hoping to be mortgage free by then, that should be plenty I'm hoping!

Ah. That would explain it. 😩

That figure taken from the article in the OP includes the state pension. The pot is generating about £100 pcm of the total

@Heatherbell1978 they probably worked out they couldn't get travel insurance like my in-laws did. Why anyone would plan to travel long haul when they are that age is beyond me. I once had to help an old couple at the airport who had no bloody insurance and she had had a stroke in the hotel room. They just took themselves off to the airport after a week of hiding in the room and relied on good will to get them home!