Is living on the state pension really that bad?

[cateringday]

I mean, if you own your home then you’re getting around £250 a week just for bills and spends.
i have a tiny pension and DH has none. I am always worrying about this but then realised that we will have no rent or mortgage to pay.
im just wondering if it would be as awful as people make out? I hear stuff saying you need £300000 in pension pot to have a comfortable retirement, why would you need that much?

New state pension works out to £1009 a month not £800.

This is a very common misconception, but no you haven't. The state pension is not like a personal defined contribution pension pot that you "pay into". You and I currently pay NI contribution. These pay for current pensions for the pensioners today. We get NI credits for every year we make a full NI contribution. The number of years of full NI credits determines how much of the state pension we will be entitled to at retirement age. When you and I retire in the future, it will be the future workforce paying our pensions.

Look at your outgoings, is £250 a week enough for your outgoings, food, a few treats and socialising, a holiday once a year?
£250 a week would barely cover our necessary bills and food..

Have you heard of this thing called home maintenance @cateringday ? What you're responsible for (roofing, boilers, gutters, plumbing, electrics, decoration, insurance, white goods to replace) with no landlord to pay for these things?

Pension credit is a gateway benefit, meaning it unlocks access to other benefits which can be worth thousands every year.

I think part of the problem is we don’t know what will happen with the State Pension. Will it always be a benefit for everyone or will it move to means tested as the population ages and it gets more expensive. My dad worked in pensions & wealth management in the 90s / 2000s and he was telling me as a teenager to start a pension as he wasn’t sure how long the State Pension would last in its current form. They’re already looking to move goalposts with pensions and IHT etc, who knows what they’ll do in the future.
My current plan is to pay down the house as young as possible, then funnel money into pensions and stocks / shares. I work in a profession that I can go self employed, and it’s not physically taxing, so I’m hoping close to retirement age I can do that to have a smaller income in early retirement. I also had my daughter later (37) so she’ll be hitting an age where I’d like to be able to help her at around the same time I’d ideally like to start winding down a bit 😬 At the end of the day though, none of us can see into the future, which makes planning limited.

I think it depends on whether you want to maintain the lifestyle you had when you were working.
We’ve always realised that we would have to tighten our belts.
Our home is paid for and our outgoings are £450 a month not including insurances, food, fuel car tax etc. We have one state pension coming in.
It’s tight, we have a small pension coming in, all of a sudden we were paying half in tax. After enquiries to HMRC, they had decided to do this to decrease our yearly tax bill for next year😣 The tax bills are a killer, on interest earned from savings and pension payouts you’ve already paid tax on 😡
Once I get my pension, I can put some money back in the coffers that we’ve been dipping into to stay afloat 🙂

The biggest difference between being comfortable on the State Pension and having to live very frugally is whether you are single or a couple. £25000 yearly will easily pay bills, run a car and have a holiday. Two thirds of pensioners are on the old pension of £9000 a year so older single women have a fairly low income.

As one of the older single women with a small private pension, I find the huge increases in food and fuel bills means having to use savings for house repairs.

That's completely meaningless information, as we have no idea how much you get from your husband's private pension. Care to elucidate?

You can do much more ......To have a warm home and food on the table, occasional lunch n coffeeout, a pet cat and a UK cottage holiday twice a year plus dinners out on birthdays and anniversaries...seems like a good life to me and that's my mother's on the state pension . And yes and also a weekly yoga class and a Chinese take away every Friday. Netflix subscription tooAll doable on State pension

This just shows the completely lack of financial understanding amongst people.

Firstly many people don't pay in at all.

Secondly even if you do work full time for say, forty years, that's not "your whole life." The vast majority of people spend half their life, at best working. So they still need to pay for the other half.

Finally even if you thought your "paying in half of your life" covers your "paying out" half - do YOU pay £250 a week of NI now? If you do you're in the top 1% of earners because someone on the average UK salary only pays £36 a week.

Tl;Dr- most people don't directly "pay in" anywhere near enough to accrue the amount currently being paid out as state pension.

Yes you might also think "but I cobtribute financially in other ways- tax, vat, council tax" - yep and that goes towards all the other services - roads, police, government, schools, nhs, defence funding, etc....and actually over the course of their lifetimes, most people don't pay in enough for what they receive there either.

Also how do you get small presents for Granchildrens birthdays or Christmas. What if the grown children have moved to other cities for work, will you be able to afford travel to visit, or this subsistence income will only allow minimal heating in winter, and covered food and utilities council tax and hopefully some insurance. No extra for that burst pipe, or leaking tap, or many other things that need to be done year in year out. There isn't even free TV license anymore, so add that to the bills. Easier as a couple but not much. Harder as a single person.

Yes that’s all it is. People qualify for full stars pension with minimal NI contributions and/or benefits/claiming child benefit. NI contributions don’t just cover pensions. Your contributions don’t sit in some account waiting until you turn 67. It’s not a savings scheme with a guaranteed pension at the end of it. Additional rate tax payers are currently payibg huge amounts in NI (as NI increases in recent years are for the whole salary) with no guarantee the state pension will still exist. Given where we are with birth rates not sure who will actually be paying tax to fund SP in future.

Definitely. If you own or about to own your house at retirement with no private pension then get all the repair and replacement jobs done for the house with any cash available. Upgrade energy efficiency and insulation etc. Much better than scraping savings and then losing all supports on means tests because you saved 20k.

Dh and I live very comfortably on state pension with a small private pension each. But we have no mortgage and only one set of household bills between us. But we are very aware that when the inevitable happens and one of us dies our income will literally be halved over night. The comfortable financial life we live now will be very different and judging by our outgoings now it will be just about manageable but a very different lifestyle. Could live on the amount but things like repaving a car, house maintenance, being generous to adult child/grandchildren would be difficult.
So basically it seems toe that 2 pensioners together have a reasonable lifestyle with modest income but one on their own would find it difficult.

New state pension is a few pounds above the Pension credit threshold. You will not get pension credit if getting new state pension unless you qualify for additional premiums like disability or carers premiums.

haven't read the full thread but just to add you can take out insurance to replace your partners pension should they die. So that would teplace their lost pension. Not sure how expensive it will be but we are just looking into it as we have dependant disabled children which will prevent downsizing to release capital and which also leads to high energy costs etc.

Personally, no, it won't be enough. Because I plan to do all the big trips I have not been able to do while working. Some of those will likely be the cost of annual SP for a couple of weeks. We have planned for this to be affordable.

Also, having even a small private pension means you're not eligible for pension credit which could be a problem if your private pension is tiny.

Your question doesn't make sense.

Do you mean what's the difference between taking out a personal pension savings plan and paying into an employer's pension plan?

An annuity is what you purchase with your pension pot upon retirement. The annuity is the promise to pay you X amount per month until you die. Any pension pot can be used to purchase an annuity. It's not compulsory to purchase an annuity any more (it used to be), you can use your pension pot however you like these days.

The difference between employers plans and personal plans is that sometimes the employers one comes with added benefits, such as for example your employer paying into it too and matching your payments. With any pension plan if you pay in 80p, the government pays in the tax relief 20p, so £1 total goes in. If your employer also pays in 80p the government pays tax relief on that bit too. So in that scenario, for every 80p you pay in to your employer's pension plan, you'll get an additional £1.20 paid in from employer and government combined. Whereas the person with the personal pension plan is paying in their 80p and only getting that additional 20p off the government, because nobody else is paying in.

We are a retired couple on the full state pensions ( well i’m missing 2 years but that’s only about £40 less per 4 weeks)
We have a small downsized house and no dependent children now. Mortgage paid off with the 20% tax free lump sum which we took from our private pensions at 60. I don’t know how renting pensioners would manage.
We have a car.
I have a small teachers pension ( £400 monthly) My husband has a lump sum invested pension ( don’t know the proper term for that) and a very small ( £200) other pension for a different job many years ago.
We enjoy our lifestyle and have enough money for a couple of holidays a year and hobbies, plus enough for general house maintenance.
However it would be very different if we were single paying all of the bills, we didn’t have husbands pension fund for large purchases eg when we need a new car/boiler/kitchen/roof etc anytime in the future.
I also inherited about £90000 when my dad died ten years ago.
Our monthly outgoings of council tax, all household bills, food, petrol, phone contracts, local trips out, gifts for children and grandchildren, dentist, hairdressers, ie everything except for special things like theatre tickets, holidays etc, come to just about the sum total of our combined state pensions.
So we are using our private pensions in other words for everything else
Also do 2 overseas long haul flights every 2 years to see overseas adult children
I think it very much depends on your lifestyle, we’ve never had much spare money anyway so weren’t suddenly expecting to live an extravagant lifestyle when we retired. We’ve had lovely holidays but never spend £1000’s on them.
We are perfectly happy with our income in retirement, everyone’s circumstances are different.

Personally in retirement (hopefully in 15 years or so), I want holidays, decent car, heating set to 25, luxury products for all my crafting hobbies, day trips, lunches out, M&S shopping, helping Grand Children if any appear, picking a care home of my choice etc. So no, that isn't enough for me but I've paid into a work pension since I was 18 and started a private pension at 43 so hopefully I'll be able manage all that.

However, all these pension payments now mean I can't do some of the above during my working life!

So even an attempt to make some provision for yourself results in you being penalised. It is not a great system, tbh.

It’s doable but best avoided if possible, you want retirement to be fun, not limited and trying ri live a frugal life,

I agree