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Original poster

Pensions - what's a reasonable income

126 replies

DisplayPurposesOnly · 12/10/2021 16:27

From the BBC website today the Pensions and Lifetime Savings Association have suggested these amounts to live on in retirement:

Minimum standard of living
Single £10,900
Couple £16,700

Moderate standard of living
Single £20,800
Couple £30,600

Comfortable standard of living
Single £33,600
Couple £49,700

BBC News - Pensions: Experts say £10,900 a year needed to retire
www.bbc.co.uk/news/business-58883053

Im off to tot up my pension pots...

OP posts:
InTheCludgie · 12/10/2021 17:37

Between state pension forecast and work pension, I'm sitting at just under minimum for a single person. DHs pension will be better than mine though as he's worked full time since paying in, I've been part time since 2012. I'll be in a position in a few years to make extra contributions to my work pot. I'm 41 and been paying superannuation contributions since I was 28.

Cocomarine · 12/10/2021 17:56

It’s important to note that those figures are net of tax.

On current personal allowances, that lowest figure (£10,900) can almost be met by a full state pension, and the top up required from a personal pension will still be under the limit for tax.

But for the moderate (£20800) you actually need very approx £15000 coming in from a private pension + full state.

Cocomarine · 12/10/2021 17:57

I do like the general approach though, costing out what one might need and then want.

Asdf12345 · 12/10/2021 17:59

I think I would struggle to do the things I want to do in retirement on under £50k. Some serious saving or reduction of aspirations will be required.

Asdf12345 · 12/10/2021 18:00

To be fair that’s when thinking about gross income, so about £30k net would suffice which may be more achievable.

ProudMaiasaura · 12/10/2021 18:04

I'm half pleasantly surprised, half gutted.

Pleasantly surprised as in my pension is perfectly adequate for me according to the projections I have vs the BBC article.

Gutted because my husband didn't begin thinking of a pension until I forced him to and shortly after that he was seriously ill so now his working/earning power is quarter of what it was. That means my perfectly adequate for me pension is going to have to stretch to 2 people... because his won't even cover the council tax bill annually, not so adequate!

For better or worse and all that.

OldTinHat · 12/10/2021 18:07

Hahahahaha!!!

OldTinHat · 12/10/2021 18:08

Single, disabled and can't work atm, living off £520 ESA a month to cover EVERYTHING!

Cocomarine · 12/10/2021 18:09

@ProudMaiasaura

I'm half pleasantly surprised, half gutted.

Pleasantly surprised as in my pension is perfectly adequate for me according to the projections I have vs the BBC article.

Gutted because my husband didn't begin thinking of a pension until I forced him to and shortly after that he was seriously ill so now his working/earning power is quarter of what it was. That means my perfectly adequate for me pension is going to have to stretch to 2 people... because his won't even cover the council tax bill annually, not so adequate!

For better or worse and all that.

But won’t your pension be boosted by £9K state pension from him? So you’re probably still better off as a couple than single.
FadedRed · 12/10/2021 18:10

Depends on so many other things though: where in UK do you live, transport costs, state of health, housing (rent/mortgage/upkeep), etc, etc…

FrownedUpon · 12/10/2021 18:25

I want to have the money to travel & do my (quite expensive) hobbies in retirement, so will need at least 35k a year. It’s a good idea to work out how much you will need and then make a plan to save though, so this is helpful.

It doesn’t mention mortgage or rent costs, so it must be assuming the mortgage is fully paid off.

ProudMaiasaura · 12/10/2021 18:29

But won’t your pension be boosted by £9K state pension from him? So you’re probably still better off as a couple than single.

Here's hoping it still exists by the time we get to retire.

FinallyFluid · 12/10/2021 18:34

We will be on £48,000 and then when I reach state pension that will be added in.

We also have Premium Bonds to the tune of £25,000 to cover emergencies, boiler, washing machine etc.

And a further £200,000 invested, 25% tax free and then tax on the rest, which is as it should be.

Presuming we both continue to enjoy good health actually looking forward to retirement come next year.

It was a hard slog at times, but it will hopefully pay dividends, so to speak.

Mia85 · 12/10/2021 18:35

Yes they do assume no mortgage or rent as they say that's the position most people are in in retirement at the moment. But it's done on surveys of people's spending so if/when the position changes then that will start to filter through.

Of course it's not substitute for knowing your own personal costs but I do think it's helpful research for giving a ball park to aim for esp for those of us with decades to go and completely different costs from those we're likely to have in retirement.

There's much more detail on the website from the uni that did the research www.retirementlivingstandards.org.uk/details and they also have quite a helpful table www.retirementlivingstandards.org.uk/How-to-estimate-likely-RLS-20211011.pdf on page 3 of the pot that you need for each standard. Of course it's not going to be accurate for everyone (I don't think it factors in the tax free lump sum) but it's a good starting point.

cloudtree · 12/10/2021 18:40

You need a massive pension pot to have an in one of £30k per annum. It’s realistically outside of the reach of most people unless they have a public sector final salary pension. I’m pretty sure it’s about a million quid needed in your pot to give you a pension of £30k per annum.

Oblahdeeoblahdoe · 12/10/2021 18:41

If you are going to make additional payments into a pension ask your employer to match or at least contribute more as well. If you receive a bonus and don't necessarily need it ask for it to be paid into your pension pot before tax too.
If anyone works in the public sector then make AVCs 8f you can as they are tax free when you take them out, no brainer.

MintJulia · 12/10/2021 18:42

I'll manage a moderate single person's pension, plus if I downsize when DS leaves home, I think I'll be able to run a small car. I've been paying in since I was 24, so thirty four years.

No champagne or world cruises but at least I shouldn't be cold. Smile

FinallyFluid · 12/10/2021 18:51

It really is all relative, Dh goes around looking like he has been dressed by Oxfam (doesn't matter whether they are expensive or cheap he still looks like a model for Oxfam Grin. I on the other hand buy a few pairs of jeans and such like once or twice a year, so no way we would hit the £1,500

I have a fab shade of natural grey so no colouring required, we wouldn't replace our cars every five years, (seems profligate IMO Grin)

Now wine is a different matter..... Grin

Mia85 · 12/10/2021 18:54

Wow finallyfluid, do you mean you have a £48k DB pension for one person! That is incredibly high, you will be in a really good place.

Porfre · 12/10/2021 18:56

Not sure who those figure relate to.

Think the figures are way too high.

You can have a great lifestyle on much less.

FinallyFluid · 12/10/2021 19:01

@Mia85

We are very fortunate, but thankfully we know are if that makes sense.

Some of it was hard won, but we have a saying in this house there are no pockets in a shroud, so we will be setting up small but regular DD's to charities (food bank, help the aged, things like that) so that we don't feel that it is a one way street. We already have DD's but these will be extra, if you like the day we are retired, comfortable and lucky we will ensure that we can share it. God that makes us sound wanky, but it is not meant like that. Grin

Not sure that makes sense but it does to me.

HandlebarLadyTash · 12/10/2021 19:02

I think the State pension needs to be at the minimum level
We need to pay in more
Saving desperately & just dont earn enough to get to a decent amount.
As a homeowner I will have all the costs of running the house & wont qualify for a benifits

FinallyFluid · 12/10/2021 19:06

Sorry just reread, no the £48,000 is between us.

Once the DB was closed at DH's company, we put what we had into one pot on the basis that if we split I would be taking 50% anyway, and therefore only had one set of management costs.

Mia85 · 12/10/2021 19:14

That's still fab though, especially if you have the state pension on top. It's great to have that freedom.

FlowerArranger · 12/10/2021 19:14

@InTheCludgie

Between state pension forecast and work pension, I'm sitting at just under minimum for a single person. DHs pension will be better than mine though as he's worked full time since paying in, I've been part time since 2012. I'll be in a position in a few years to make extra contributions to my work pot. I'm 41 and been paying superannuation contributions since I was 28.
But why is he not helping you fund an additional private pension to make up the shortfall?

Presumably the decision for you to go part time was a mutual one,

It's so sad to see how many women jeopardise their financial future because financial resources are not shared equally.