Is the state pension really that bad?
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Nice to see I've managed to generate some debate for a change. With regards to my predicted outgoings, that is what I'm spending at the moment, ok Gas/Elec may have to be a bit higher when I'm older but otherwise I can't see any other errors, and someone mentioned I might even get a CT reduction.
And as for your house will need a new roof/boiler etc, maybe in the future but I would imagine that would not be an issue if done just prior to retirement. I certainly would'nt be just "existing" on that budget that's for certain.Current MFD 1st July 2026
Target MFD 1st April 20230 -
You could save on the TV licence: just stop paying, say you don't watch a telly any more, and refuse to let them into your property. Look upon it as striking a blow against the class of twerps who run the BBC. If people can think of any other ways of simultaneously saving money and hitting out at the Blairites (and worse), do volunteer them.
Dont pensioners get the telly license free anyway?0 -
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Actually thanks to Boris, there is an Oyster 60 pass for all those living in the London boroughs for an initial fee of £10!
Hadn't realised that. Presumably that was to make up for the Freedom Pass eligibility being aligned to state pension age. A very generous scheme for those still regularly commuting for work at 60+. Potentially takes a lot of cars off the road if people can use public transport for free. My mum will often leave the car at home due to being able to use free public transport.0 -
If you are frugal, and depending where you live, you can certainly cover many of your expenses with the UK state pension. But asking how good or bad is a pretty complex question and seems to invite comparison with other state pensions. The introduction of the new flat rate has reduced the pension for many mid to high earners and has not really increased it for many lower income people who got pension credit on top of the basic rate pension. Class 1 NI employee rate of 13.8% seems high to me sitting in the US where the equivalent employee FICA and Medicare payroll tax is 7.65%. Of course it's hard to do a comparison as it depends on how the money is spend and in the US even retired people covered by the federal Medicare system still pay about 70 pounds a month in premiums.......and then there's the whole question of funding of the systems.
I have 35 years of UK NI payments and if I took the pension today It would be £8060 or about a third of the median UK income.
As a comparison I have just 19 years of US FICA and Medicare payments and if I could take my US social security cheque today, and converting it to pounds, it would be £20k which is half the US median income. So I'd say the current UK state pension is pretty poor when compared to US social security. Maybe someone with experience of other EU countries could also comment.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
The state pension doesn't feature heavily in my retirement planning because:
- I won't receive it until I'm 67 at the earliest. Several of my relatives died before reaching 70.
- Of all pension types, it's probably the one most subject to political interference. It might even become means-tested in future.
- At present, although I live a pretty frugal lifestyle, I could spend a five figure sum on house repairs or helping out a relative if I wanted and barely notice. The thought of not having that kind of financial freedom is scary.0 -
The £8K State pension could be boosted by means tested benefits to pay for rent and council tax, which could take it up to about £18K of pre tax income.I have 35 years of UK NI payments and if I took the pension today It would be £8060 or about a third of the median UK income.
As a comparison I have just 19 years of US FICA and Medicare payments and if I could take my US social security cheque today, and converting it to pounds, it would be £20k which is half the US median income. So I'd say the current UK state pension is pretty poor when compared to US social security. Maybe someone with experience of other EU countries could also comment. Posted by Bostonerimus
As for French and German State pensions, they are actually hybrid schemes - part State and part private - and the French and Germans pay a lot more into their schemes than we do. Comparing the French and German schemes with the UK State pension would be like comparing apples with oranges. Like for like would be the UK State pension plus any private or occupational pension scheme the pensioner paid (or could have paid) into.0 -
The UK SP is one of the worst in Europe, Greece as the best.
http://www.telegraph.co.uk/finance/personalfinance/pensions/11189414/Why-Britains-state-pension-is-one-of-the-worst-in-Europe.html
A Greek gets £95% of the 'average Greek' salary, a UK person gets just over 30% of the 'average UK' salary. The worst is Estonia where they get 26% of their 'average' salary.0 -
Which is partly why Greece is all but bankrupt !0
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It is not bad. I a few times on this board argued against blindly telling people they need adfitional pension without knowing their circumstances. If average household income is 28 k after tax and NI it is reduced by 2 k at least giving 26. Children expenses come out of it - lets say modestly one child costing about 4 k a year ( no excesses like expensive holidays, hobbies, school trips, Christmases etc(. It leaves 22 k. Mortgage coming out - lets say 7 k a year , again very modest. It leaves 15 k - basically the same as 2 full SPs. so that couple does not need any additional pensions as their disposable income in retirement on SPs will be no less than while working.
On another hand you not factoring anything for major expenses and household items seems very unrealistic. You think you will pay for everything just before retirement and the wind is not going to blow your fence 2 years into it or you will never again in your lifetime buy an electrical item?
I suppose not including any medical,dental, professional, legal expenses and no transport is because you do not spend anything in those categories now. . Life id far better with being able to afford the above though and if you did not have sn occasion where you needed to spend 1O k on solicitors before who is to say it will not happen to you later...The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0
I haven't bogged off yet, and I ain't no babe
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