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?

Well, many younger people cant afford to get on the property ladder and rents usually higher than a mortgage so for them there's that.

Then theres the age at which you get it. My parents retired in their late 50s, my grandad raised two children, built savings and owned a home as sole provider, my other grandparents were the same. And my grandparents got their state pension at 60.

Then theres miminally - council tax, gas and electricity, water bills and food. Which I think could easily be £750 a month.

Most people reasonably want more: Internet, TV streaming, phones, cars (which come with insurance, fuel, MOT and tax) pets (which come with insurance food and vet bills) new clothes.

Before you think about occasional trips, presents for birthdays, christmas, maybe a holiday.

If you own a home you can probably survive on state pension. Just.

This. As we age, our teeth tend to require expensive dental work and it's not free for pensioners (despite what some people assume).

We needed a new roof two years ago - many thousands, which we're well enough off to pay for. If we were simply on state pension with no savings (and there are a fair few pensioners in this very position), it wouldn't be possible.

Even paying for new white goods when they break down would be beyond the reach of someone on state pension alone.

That's true but over 65 isn't really that old. I think the over 75 or 80 figure is more important and will show a much higher level of need.

I also always wonder. If we are lucky enough to have mortgage paid off, no debts, decent car, some emergency saving in case of inevitable…is doesnt seem that bad to be honest. Two of us could get £1.9k monthly, you can easily save from that. Not much but enough for a holiday once a year.

but life is life…above is fortunate position, you never know what you will need money for besides bills and food.

My mother in law has no personal pension, just state pension and pension credit. She hasn’t had a mortgage for many years now, she’s 82. She runs a small car, goes on holiday at least once a year abroad and says it’s more than enough for her to survive on.

She is by nature very frugal, doesn’t eat vast amounts of food and doesn’t drink or smoke. She buys in charity shops and gets some real bargains, and sometimes sells them on eBay or vinted and makes a bit of extra money.

I intend to downsize once my kids fully fledge. No mortgage, only paying for my own gas, electric, water, food, small car, some savings each month, cheap holiday etc, on £1000 a month I'll have a very similar standard of living to what I have now. I do have private pensions but they're relatively small due to time out of work due to kids and chronic illness.

You can survive on it for sure, but it's a long time to live on the minimum.

What's the difference between buying an annuity and just making additional contributions into an existing company pension (say local government)?

A friend of mine who is a teacher told me that for every £8K additional lump sum contribution she makes into her works pension she gets back around £500 per year for life. Clearly she'd have to live longer than 16 years after retirement to get her money back... Sounds like a pretty good deal, if true.

My mum struggles with her OAP and a very small private one - about £100 a month - which means she gets no benefits.

No mortgage but other bills add up
Gas
Elec
Water
Broadband
TV licence
Council tax
Car insurance
Petrol
Cat tax
Holiday insurance (covers UK trips and Europe)
Food
Savings for holiday
Savings for Christmas/birthday
Savings for car repairs
Savings for house repairs

You need to calculate what you need and plan accordingly

Anyone in a defined benefit pension should almost always put money into that pension, not elsewhere.

Defined benefit pensions are worth their weight in gold.

I don't think 'many' people do this. Some do and probably more than did a few years ago as rates have improved. But most people will leave their money invested and draw an income. So it's not just £300k, it continues to grow.

If you are happy to live with just the basics I think it could be okay for food only. But if you want to be able to go on holiday, buy clothing, have memberships like gym, netflix etc. These things all add up.

Home maintenance would also be an issue. What happens if you need new windows or a new roof?

Of course not, but you don’t know if you need it until you actually need it or you’re dead and won’t need it. Life can change in a second.

Everyone can't be shift leader/manager! Many people do work all their lives on minimum wage or not a lot more. It really isn't true that anybody can earn a fantastic salary just by working hard/improving themselves. In the real world, lots of people will never earn huge salaries.

You're right about the lower cost homes. My sister is currently in a council run home due to her challenging dementia. The care she gets is excellent. The staff and managers are approachable and have a SOH which is needed as her language is ripe , to say the least! The downside is that council run care homes are few and far between.

My parents had that plus very small private pensions and money from downsizing their home. You need less than when working, supporting a family etc but it depends what sort of lifestyle you want. I think most people would need a small part time job or private pension on top and some savings. My mum and dad also moved to a holiday place and didn't go on holiday very much, instead. If you want to travel you need a lot more. Think of how long you intend to be retired for as well. They had 20+ years together and managed their money pretty well.

I don’t think it’s necessarily true that expenses go massively down in older age. For example, my dad at 80 has just had some very big dental bills and has needed to do work in the house. He needs taxis as doesn’t drive anymore and has a cleaner. I don’t think you can rely on state pension to be enough if you need to maintain a house. Money at that stage buys choices even if your lifestyle isn’t extravagant.

My granny only had old style state pension and was pretty poor and was frugal in how she lived other than running a car. My parents definitely helped her out financially. One of her wealthier friends gifted her money in a will and it made a massive difference to her in her 80s. You don’t really think about inheritance coming in your old age but her friend could see she didn’t have much at all and that gift really helped her.

Yes, the predictability is a big thing. People often say that it's harder for pensioners than working because they're on a fixed income. But that perspective depends on your experience of working life. If you had a career with progression then the idea you can't do anything to get more money seems hard. If - like many people - your working life was low-paid, unpredictable and insecure work then a fixed income seems a good thing.

@Pddn If everyone got a STEM degree like you then you'd need a STEM degree to get a minimum wage job.

If everyone was a millionaire then a million pounds would buy you a cheap package holiday for a week.

You directly benefit from the scarcity of your abilities - they make it possible for you to end up further up the heap.

Luckily for you, a basic inability to understand how life works for the majority doesn't attract a financial penalty (Hint: for you to do well, others must do poorly - your situation is built on the backs of those less fortunate as well as your own hard work).

Feel lucky rather than patting yourself on the back. It's healthier for both you and society.

I know, or knew, a fair few exceptions. I don’t think it is as uncommon as people assume.

I take home £640 per week (I am paid weekly).
Rent (SH) and CT, which I pay in full is £270. I put away £100 a week for holidays. I won’t have those costs in retirement, already explained in my much longer previous post! So 370 + 240 current state pension rate = £610.

So I am basically only £30 a week better off day to day, than I would be if I was retired. It’s not a lot. I could cut £30 from my spending now if I had to without suffering. I eat well, wfh and don’t skimp on the heating. I don’t feel “poor” in any way. I know people with far less.

I had no pension then my work place opted me in (5 yrs ago) and I opted straight out! The payments they were going to take was a big chunk of my holiday budget! So I don’t take any holidays for 15 years in the hopes I can take some post 67? That makes no sense. The pot would have been tiny and probably would go on council tax anyway! Because with a private pension I’d get no reduction.

I’m not “unusual” in any way, sure MN is skewed to high earning home owners but there are plenty out there in my circumstances, plenty worse off than me too.

I mean, you could live on it, but frugally.

Depends which pension you get, my parents only entitled to the old state pension which is below the new state pension yet they are still expected to pay full council tax, water, electric, gas, etc..then obviously food costs, transport costs to various hosp and docs appointments it all adds up and thats without any emergencies that may crop up

If you own your house outright, low council tax band, one car outright and low insurance and are not wanting to travel much then you can live, I know several people who live on just the state pension and have good lives but they do have to save up for things and don’t go on holidays unless their family pays.

Maybe you can manage day to day if you do not drive. What if you need a new roof, a new hip and don’t want to wait 2-3 years, a holiday. My DM manages on a state pension but has no housing costs as she lives in a council owned property and has a low cost hobby.