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.

This, totally.

some people are remarkably short sighted about it. Why on earth anyone doesn’t have ideally an occupational pension or at the very least a private pension, is beyond me. The govt introducing auto enrolment was a pretty big hint that people should make other provision alongside the state pension. I see the state pension as a top up, not something I’ll rely on as my main income.

In a smaller property that's efficient for bills and low council tax on two state pensions, some private pension and savings for larger purchases it should feel quite comfortable, especially as you say you're used to a modest lifestyle.

Those who say you'll struggle will be those with higher bills or bigger expectations about travel, cars, etc.

However, you should probably consider what position the surviving spouse will be in when their income drops by at least £1k pm but bills don't go down by nearly as much. In that case, would downsizing be an option? However, having said that, DM is a widow in a 4 bed house with the state pension and maybe £3/400 pm on top and she seems to have plenty of money. Always spending on the house, has the heating on when she wants, eats out, treats grandchildren, has pets, etc. She doesn't travel overseas or have a car but lives on a regular bus route and goes on day trips and a short annual holiday and takes the occasional taxi when the bus isn't convenient.

Our FA says that the older you become, the less you spend as your social lives etc reduce. But at the same time, costs of care at home (cleaner or gardener) may start as well as other health costs (eg private appts is the NHS is too slow and even private operations.)
These are also considerations.

Eligibility varies by council, you go on a waiting list and bid for one in the same way as other council properties - obviously there are age-related criteria.

Home - Retirement Living Standards

The guidance here suggests that a basic living standard is achievable on £21,600 gross for two people but £13,400 for one person- there's some info on what they have assumed about living standards on the site (obviously these are just averages on your own circs will vary). But the key point is that two can live for less than twice what one can for.

While you are both receiving state pension you will be easily over £21,600, but if one of you dies the other will be left on less than the suggested minimum. Given that you're comfortably over the £21,600 it would be sensible to see whether you can ring-fence all or part of your savings to leave the surviving spouse a bit more.

Thank you all.Im not short sighted.When dcs were small a financial advisor wouldn't sell me a pension as our income was low and he had no idea how we made ends meet.
Mortgage paid before 50.ploughed many hours into work both of us.
No drinking smoking Christmas presents beyond gifts for DC.
Saved v hard.I think we will be alright.I was simply asking if anyone lived mostly on state pension.
We have A 3 bed house in a nice area we could sell and downsize too.

As you get older you may have changing needs - warmer house, cleaner, ready prepared food, taxi to hospital appointments.

When dcs were small a financial advisor wouldn't sell me a pension as our income was low and he had no idea how we made ends meet.

Independent FA don't sell anything (ours doesn't.)
They aren't on commission.

You can start your own private pension now and it can be invested in until you're 75.

I did, after 60.

I was simply asking if anyone lived mostly on state pension.

Yes, some people do, of course as they have nothing else.

With a bus pass too I think his pension will surfice.

Not sure what you mean. Do you mean you could live solely on his state pension AND your salary while you're working still?
OR do you mean you will stop work before you get your SP and live solely on his?

But what you need to do is consider how you would live on one state pension (and any percentage of your H's occupational pension) if you are widowed.

Given that you're comfortably over the £21,600 it would be sensible to see whether you can ring-fence all or part of your savings to leave the surviving spouse a bit more.

Most married couples work on the basis of leaving their assets in their Will to their spouse and any children inherit only if there is any to spare.

Is that what you meant?

I am 63 and retired. No I could not live on just a state pension alone when I eventually receive it.

Both DH and I built up private pensions and I had the additional benefit of being a teacher for 20 years. We could downsize at some point to free up capital but I would rather that capital went to my children. But who knows what the future brings and plans can easily change.

if your DH dies before you then depending upon what he has set up you should get a spouse pension.

Yes we do

There are going to be so many older people starving and freezing.

Why ? I’d rather be a pensioner than a single mother in 2026.
And any of that is preferable to being a two parent working family

Two people living together on two state pensions probably could manage. One person living alone on one state pension. No i don't think they could. Or else would live a poverty stricken life.

I wouldn’t want to try but some people have to. I would imagine a very cheese paring life with no car or holidays or lunches out and some very hard times.

It really depends what council tax, water rates and energy prices do.
Currently yes easily. We live on a lot less now.
Three years ago it would have been easier.

Don't forget that when the SP rises next year, it will come into the basic tax bracket (above the personal allowance) and some of it will be lost.

Your interest on savings (not ISAs) will also be taxed at 20% because that interest will be added to your SP (and any private pensions.)

I don't know if OP is reading still but I keep repeating that although 2 state pensions is do-able, one is a different matter.

She needs to look at the years when she may be a widow and what then. It's hard to confront reality but our FA advises on the basis that statistically women live longer so that's what needs planning.

It depends on what age you are when you only have one SP.
At 70-75 you will be more active compared to being 90 , and perhaps have needs for a car replacement or repairs, holidays etc.

It's also all very well talking about downsizing, but any equity from a house sale will be vastly reduced by EA fees, legal fees , removal costs, and stamp duty (depending on house value.)

^Don't forget that when the SP rises next year, it will come into the basic tax bracket (above the personal allowance) and some of it will be lost.

Your interest on savings (not ISAs) will also be taxed at 20% because that interest will be added to your SP (and any private pensions.)^

The tax will be minimal as 20% of a fairly small amount. They also have the personal savings allowance so can earn £1000 of interest tax free.

I know it will be a minimal amount but if things are tight, it needs to be in the equation.

None of us know how much savings they have but if it's significant and they are getting a lot of interest, it's a factor.

Surely the important point is that very few people who are well off in their working life with new cars, multiple holidays and meals out, will be retiring on just a basic state pension and no savings. If they are, they should have thought about it earlier. Those who have never earned enough to amass saving and private pensions aren't going to be going out for lunch twice a week, because they've never been able to afford it. When it comes to holidays, provided you live reasonably close to a regional airport, an out of peak season week in Spain or Italy is cheaper than going away in the UK. If I book far enough in advance I can get a flight to Rome, for less than the cost of a tank of fuel for the car.

Depends where you live. I live in the country, in a cold part, five miles from nearest town, one bus a day which is a mile awayy from my house. So car is a necessity, and you know what that costs.
plus you have the usual expenses like dental, opticians etc, you might get a biggie like boiler or roof repairs.
we have the worst pension in Europe, designed to keep you in a joyless life just above the breadline.

So why didn't you move? Because where you live is your children's inheritance? You'd rather live in poverty than comfort?

I could not imagine having a first grandchild on the way and not having a car despite being able to drive. I would prioritise trying to keep a car OP. Bus routes are all well and good locally but if your DD lives 100s of miles a way (presuming you are close) I’d put a car in the ‘close to essential’ category.

OP if you’re still working, are you auto-enrolled into a work pension? If yes, in your situation I would up your contributions now to create a buffer for the future. If you’re not in the work pension opt in now, and contribute as much as you can as you’ll benefit from your employer’s contributions and the tax benefit. If that means that things are tighter now, maybe it’ll help to project living on a future reduced income - I know a lot of people do this as they approach retirement.

Have you really costed out your expenses. As well as the main bills of energy, water, tv license you need to add fuel and tax/insirance (if you have a car), car maintenance, haircuts, money for presents/gifts, little everyday spends like the odd cafe or restaurant meal, subscriptions, any pet expenses, travel if you want to go further afield or take a holiday. I think it’s do-able as a couple but tight. You’d have to live frugally as a single person.

Personally, I would hate to have to watch every penny as I like to go to the theatre, cinema, go on holiday but if budgeting is something you’re used to then you just continue as you were.

If you live in or near a city, there are usually lots of low cost or free things for seniors you can do and social groups (although there is sometimes a cost for these).

I would also s ope out a cheaper area that I’d be happy to downsize too to free up some ‘living’ money. I might be wrong but it doesn’t sound like you’ve had a lot of fun times? Life is for living, especially in the Autumn years.