Can you live on a state pension if you are mortgage/rent free.

[whatisforteamum]

I'm sorting out the bills and since lockdown we ve lived a frugal life.
Always counted food costs and lessened trips to the garden center.
Dh retires this year with a pot of savings myself in a few more years.
I've seen too many single older women who's husband's have left or died before they could retire or do much together.
With a bus pass too I think his pension will surfice.
Am I deluded to think you can live on a state pension.
We have plenty put aside for household up keep etc.

I've seen too many single older women who's husband's have left or died before they could retire or do much together.
I've answered this as if you're asking about living alone on one pension.

Are you asking that or if you could live on £25K as a couple?
Maybe your heading to the thread needs re-thinking as it's not about you, but you and your DH, so 2 pensions.

It's not clear.

It's probably just about doable - and unfortunately, many people have very little choice but to manage as best they can on just the state pension. However, I wouldn't choose to do it if I had an alternative, such as working for a few years longer in order to build up savings or add to an existing pension fund.

The triple lock increases in the state pension are unsustainable and that particular gravy train must surely be pulling into the sidings sometime soon. So you can't rely on the state pension keeping up with the cost of living in the same way that it has for the past 15 years or so.

If you were widowed, could you manage on just the state pension, bearing in mind that as you get older you'll probably need to heat the house more, might need to pay someone to help with cleaning, gardening and so on?

I would think very carefully before walking away from a paid job, OP. It's much easier to stay in employment when you're over 60 than it is to find it.

You can if you are very frugal and if no unexpected expenses arise, but it won't be a comfortable life.

What are you including as 'bills' ?

Does that include you food and other groceries shopping?
Petrol?
Insurances?
Haircuts?
New pair of glasses?
Needing to go to the dentist ?
Replacing a pair of shoes or a coat ?
Birthday / Christmas presents ?
The odd treat ?
Or is that just monthly bills you have on Standing order or direct debit ?

As £1045 x 12 months is £12,540, so that leaves you very, very tight before you get to the one off 'fridge breaking down' bills.

There's a lady on YouTube doing just that, think she is called Ali lives well for less. She has some good videos on retiring on a small pot

If it helps, we created a spreadsheet of what our annual spending was pre- retirement. We went through all our credit card statements (we pay if off in full each month) and saw what we usually spend. Everything goes onto the card We rarely carry cash.

Our monthly outgoings (many paid annually) include -

Council tax (over £300 a month)
Water rates (about £1Kpa)
House insurance £500 pa
Utility bills (around £2k pa)
Food - usually £100+ a week
Two cars to insure, service, buy fuel, (+budget for repairs)
Phone/ internet
TV licence (no other subs for TV)
Ongoing house repairs (eg paying for painting outside of the house - not annually.)

Dental care over a year (3 hygienist appts each @£75 an appt.)
Hair cuts (and more, for me)

Christmas gifts
Birthdays
New clothes
Make up/ toiletries over a year
Holidays (paid for out of annual income but could be out of savings if necessary.)

Yes you can fairly easily, provided you aren't going to need expensive house maintenance, a new car every other year, long haul holidays and you don't want to have dinner out or a takeaway 3 times a week. TBH not much different from the way a lot of people live before they retire.

I could live on state pension if I had to.

wouldn’t want to. It wouldn’t leave much room for anything other than basic living costs.

I ran a calculator through and pension credit etc would be about £1550. That includes my rental element. That is not much less than I currently take home each month so I would be able to manage as my expenses are already tightly controlled. If you have been used to having a lot more money it would be harder.

Is that just your bills / DDs or total actual spend?
Are you looking at one full new state pension only?

We have plenty put aside for household up keep etc.

This is obviously key, too.
General weekly or monthly bills on the state pension, but having a generous savings pot if it is needed, gives you a very different life from 'state pension alone'.

Loads of people do live on state pension as only income, so obviously its possible. Don't know if its enjoyable though.

It would depend a lot on where you live, and what kind of home you want. A little flat will be much cheaper to heat and lower council tax than continuing to live in a family sized home. Living in a town where you can walk to the shops will be cheaper than living in the back of beyond and having to run a car.

Holidays will probably be out of the question apart from an out of season break in the UK. You wouldn't be able to support much of a fashion or cosmetic habit, but that might not be your thing anyway.

Only you can answer this question really, as a lot of the answer depends on your lifestyle and expected standard of living.

Me and DH live in the South West, not a posh part, we run a car, have a dog, a couple of UK holidays a year, decent house, we eat well, no mortgage. Our combined income is about 30k a year. If DH died my income would be roughly half this. To maintain this standard of living on my own I would have to sell the house and buy a small flat or cottage.

I couldn’t imagine doing so, but my mum does. She budgets every penny, doesn’t go on holiday. Buys ‘budget’ when she needs anything. It’s not a retirement I would relish to be honest. I could survive on it I’m sure, but I’d like more than that after a lifetime of hard work. We have agreed that DH will work a couple of years longer than me so we can retire together. He jokingly grumbles about it, but it makes sense for us.

Reading your OP again, my DH retired early 4 years ago and received his state pension a year ago... he burnt through his savings and still has a top up shop habit (go for milk, come back with beer & crisps...). Not working did not equate to not spending!
His work personal pension is only £250 extra per month. He covers everything car related and energy. With his pension, he has sufficient because I cover the rest Incl. Food (no mortgage).
I am quite worried. I have modelled income over next 7 years before I get my pension, we are reliant on me working (50% of my income). Really I should hang on but recognise if I don't want to work, then sacrifices have to be made. I do have savings and no debts.

Apologies yes I should have said I still work.
Adding it all up the car is the biggest expensive and the thing to go if needs be.Our dd lives hundreds of miles away and is having our first dgc.
Looks doable and a bit of budgeting like we do now without the companionship of work or the distraction.

AmicaNemica
Difficult isn't it.

I think the question is less 'Can you ....' and more 'Would you choose to.....' if there are other options.

I retired a couple of years ago and spend a LOT more now than I did when I was busy, in work all day. I'm not talking big holidays, but 'a few £££ here and there' type things.

I think it’s doable if you have to but I personally wouldn’t want to. I’d like money to be able to travel and do things in my retirement. Treat my DCs and DGCs if I’m lucky enough to have them. Won’t you want to be able to go and visit your DGCs when you want to, take them away?

So is your car on finance?

You're asking two things here really.

-1 Can you manage on TWO state pensions (that's different to just one.)

-2 Can you manage alone, if he dies first, on ONE state pension.

The answer to 1) is yes, but you'll have to be careful It's worth looking online at this because there is guidance. The upshot of it is that £25K pa gives a basic - ish standard of living but not much wriggle room for overseas holiday, new cars, or a lavish lifestyle.

The answer to 2) is 'probably not'. This is because most of your fixed costs will be as much as or slightly less than for a 2 person household (not half.) Your bills already come to more than the state pension. So you'd be dipping into savings just to get by, or would need to downsize.

You need to plan for your older age, from your late 70s into your mid 80s or older.

If you have savings, are they 'inflation proofed'? Are they in accounts keeping up with inflation so that in 20 years they will not be worth a lot less?

How much savings are there? If you had to live from 75 to 90, on a state pension, how long would those savings last if you had to take £10Kpa out of them?

Yes it’s doable, I know someone who does but he is careful with money. If you have less than £16k savings there are additional benefits you can get, like he pays almost no council tax and is on a special tariff for water due to low income.

I agree this is very wrong.

You can still access those things if you have full state pension and not on pension credit, as long as you don’t have over £16k in savings. You just need to apply for them separately.

All over 60s get free eye tests too.

It's all means tested. And they are very much 'on the case' of giving away assets to children as it's classed as 'deprivation of assets' to try to get under the £16K.

It's a very unfair system if it does work that like as it rewards people who don't save or take any responsibility for their older age, who've never worked much or tried to save. Whereas anyone an a low income all their lives but who watch the pennies and try to be careful, lose out.

If you get state pension only (no additional payments) and have under £16k in savings you will likely get a heavy council tax reduction.

https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/council-tax-reduction/

Yes but having less than £16K would barely pay for 2 funerals these days.

I'm not disputing what you say- my mother doesn't qualify, being just over the state pension income and has slightly too much in savings.

In the OP's case it is irrelevant anyway as she says she has savings.