This is not going to be enough to live on is it?

[meddlesomemarch]

Just done a pension estimate and it looks like in 8 years time, aged 67, the total sum of my pensions is only going to amount to £21k per annum. Whilst the house is paid off, this seems depressingly low. Am I being overly pessimistic here?

Financial advisor has said at the age I am now (59), it won't be worth paying into pension but if I have any spare monthly cash to put into AVCs instead.

Which? Magazine have just updated their estimates for how much income pensioners need to maintain different lifestyles in retirement in the light of higher spending by retirees especially on housing & energy
Essential = groceries, energy & transport
Comfortable = essentials plus some holidays & leisure spending
Luxury = all the above plus long-haul trips, new cars & club memberships

For a one person household, their figures are
Essentials £12,000 pa
Comfortable £19,000 pa
Luxury £31,000 pa

For two people it's
Essentials £19,000
Comfortable £28,000
Luxury £45,000

I think that sounds fine.

I think that will be fine if you have no rent or mortgage to pay. You could always do some tutoring or mark exam papers for extras.

If you were envisioning a lavish retirement of dining out every day and cruises several times a year then no, it’s not going to cover that. But do you currently live like that anyway? What do you currently spend after housing costs and excluding the costs you’ll no longer have, such as travelling to work, office clothes etc?

Alternatively, you can continue to work part time - I have several colleagues who do, all as much for the “keeping brain alive” and social aspect of it as much as the money.

Hi OP. Its a bit like asking how long is a piece of string. With your mortgage paid and no need to save for the future (you are at it) then I think this looks okay. Does the figure include the state pension? Also as a default option at some stage you could release equity from your property.

It is a big pension. Well done.

Is that gross or net? My nett income is £1700 which should be more than enough if I wasn't paying off some credit bills and have a high service charge on my flat.

2 of us live quite comfortably on that.

That’s a fairly hefty pension and would require a pension pot of about £300000, excluding state pension, so you will better off than about 90% of people

Just linking to the Which report that a pp mentioned www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p

Obviously it depends on your circumstances but on the face of it that's a decent position to be in and much better than many people. The great thing is that you have a guaranteed income with inflation protection built in for as long as you live. That plus a paid off home gives you great security.

This. It is doable.

it is what people are earning currently.
what did you think you would receive?

Sounds pretty good to me.

As an aside, which has so much more good advice than it used to, the kitchen reviews and guide costs are great too.

@meddlesomemarch I'd look into whether you can keep working pt for a few years post 67 if your job doesn't corrode your soul - I'd rather do that than worry.

Yes, of course it's enough to live on with no mortgage or rent to pay and only two mouths to feed.

It would be fine now but is it adjustable for inflation? Bearing in mind you might easily live 20 years beyond 67?

How do you currently live?
My salary is £13000 and I survive!
So while it may be less than you're used to, it will most certainly be enough to eat and pay your bills.
I don't often say this but it's actually quite offensive to the vast number of people currently on low incomes to say that you're worried about surviving on £21K.

I think that's a fairly decent pension - £1,600 a month with no house costs to pay.

You won't be buying a new car regularly or taking round the world cruises on that but it would allow for:

£200 council tax
£200 for energy given prices are ridiculous
£100 for water, internet, mobile etc
£100 for car tax, car insurance, house insurance etc
£50-£100 for MOTs/car expenses

That's £700. Even allowing £50 a week for food, you'll have a bus pass so hopefully petrol costs would be say £100 a month (mine are about £50 a month currently). That's then £1000 a month which leaves £600 for holidays, presents, eating out and clothes etc.

I would assume that you have savings for e.g. if you need a new boiler etc by now and that retirement is the time you start really drawing down on those savings but if not your lumpy sum might help.

Are your pensions definitely entirely career average or do they have a final salary element? If so you could push for promotions etc to bump it up a bit if you wanted.

A lot of pensioners live on a lot less

Another person coming to say that's what I earn now! DH isn't on too much more. We have two kids and pay for housing and we manage.

Teachers' pensions are index linked to CPI. Might not be perfect but should broadly keep up with the inflation the OP experiences.

Seriously OP? It’s plenty. We live very well on about that as a couple in (early) retirement, run 2 cars, have holidays and expensive hobbies

we have other savings and fully expected to dip into it for everyday living but 3 years in, we simply haven’t needed to

That's loads. I live on that now with a mortgage.

Is this for one person? 1600 a month with few housing costs (just essential maintenance)? That's plenty surely? Do you have a very large income at the moment? Perhaps it's just the adjustment to a more normal level which feels difficult?