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  • FIRST POST
    • Ashingtonian
    • By Ashingtonian 6th Jan 18, 5:51 PM
    • 135Posts
    • 102Thanks
    Ashingtonian
    Is the state pension really that bad?
    • #1
    • 6th Jan 18, 5:51 PM
    Is the state pension really that bad? 6th Jan 18 at 5:51 PM
    If I were to retire tomorrow I would get £690 month.

    Assuming my home would be paid off and I won't want or need to run a car, based to today's prices my monthly outgoings would be as follows:

    Groceries - 150
    Council Tax - 90
    Gas/Elec -40
    Phones/Internet - 40
    Water/TVL - 30
    Entertainment - 100
    Clothes - 20
    Emergency fund - 100
    Insurances - 20
    Xmas/Birthdays - 50

    In total £640. And I think I have been fairly generous in regards to groceries, entertainment and emergency fund, which should cover all miscellaneous spending. Obviously there would be no fancy foreign holidays or going out on the drink every night, but its certainly by no means an austerity lifestyle.

    I will have a small work pension that should add a couple of hundred a month into my pot but even without that I doubt I would starve or go without on anything fancy. Opinions?
    Current MFD 1st July 2026

    Target MFD 1st April 2023
Page 2
    • DancingBadger
    • By DancingBadger 6th Jan 18, 10:57 PM
    • 148 Posts
    • 123 Thanks
    DancingBadger
    Ha, yes. What is it about women that make them want to turn the heating on full blast and open windows?
    Originally posted by EdGasketTheSecond
    My ears are burning...
    • Mutton Geoff
    • By Mutton Geoff 6th Jan 18, 11:05 PM
    • 1,032 Posts
    • 1,107 Thanks
    Mutton Geoff
    Are there any girls/women in your household.

    My girlfriend thinks she cold die from the cold at my house. At her house, it's so hot I feel like I could die from heat exhaustion. My sister has the heating turned up so high that you can't move without breaking into a sweat.
    Originally posted by TheShape
    Recent Daily Mash article - Women forced to attend thermostat awareness course.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 11:11 PM
    • 5,204 Posts
    • 9,911 Thanks
    enthusiasticsaver
    Our gas and electric is more than double that but I suppose yes it would cover the basics. No money for holidays though and we still run 2 cars even though retired. Also maintenance on the house unless that is supposed to come from emergency fund.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • janb5
    • By janb5 6th Jan 18, 11:46 PM
    • 1,808 Posts
    • 6,416 Thanks
    janb5
    Are day to day living costs much different in London? If you own your own property so that housing costs are not an issue I don't see why living in London would be much more expensive than anywhere else unless you're spending your time going out in the West End. Public transport is also relatively good in London and free with the Freedom pass from State Pension age.
    Originally posted by TheShape

    Actually thanks to Boris, there is an Oyster 60 pass for all those living in the London boroughs for an initial fee of £10!
    • marlot
    • By marlot 7th Jan 18, 10:53 AM
    • 3,209 Posts
    • 2,336 Thanks
    marlot
    Rather than calculate bottom-up like the OP, I have a spreadsheet which I've downloaded from the bank. It shows all my spending for the last three years.

    I'm expecting to retire this year, and my spending will likely rise in early retirement, before dropping. Finally, it may rise considerably at the end if one of us needs care.
    • GibbsRule No3
    • By GibbsRule No3 7th Jan 18, 10:59 AM
    • 641 Posts
    • 371 Thanks
    GibbsRule No3
    Actually thanks to Boris, there is an Oyster 60 pass for all those living in the London boroughs for an initial fee of £10!
    Originally posted by janb5
    I think it has gone up for the paperwork, possibly £20 now but so worth it. I have had mine for three and a half years and it must have saved me more than £2000 a year, no time limit on the bus use and who wants to use the train before 9.30 except in an emergency trip somewhere? OAPs I know who have the full pass like using their pass on busses outside tfl area but I really only have use within, so am happy, keep waiting for the new mayor to cancel the option though.
    Paddle No 21
    • eagertolearn
    • By eagertolearn 7th Jan 18, 11:01 AM
    • 35 Posts
    • 36 Thanks
    eagertolearn
    My (maximum) state pension would just about cover Council Tax, Energy and insurance bills. Count yourself lucky as you obviously do not live in the south
    • Naf
    • By Naf 7th Jan 18, 11:12 AM
    • 2,987 Posts
    • 2,218 Thanks
    Naf
    I guess to some extent it depends on where you live...I think some in London & SE will struggle but for those up North it's a bit easier to get by and certainly covers the basics.
    Originally posted by BLB53
    So we turn Cumbria into one big old folks home?


    Is that £690 a month the figure from your estimate, if so it's paid every four weeks so you actually get a bit more per month, which is £747
    Originally posted by capital0ne
    I always like to budget four-weekly amounts as monthly, then you get a "free" one every year.


    Ha, yes. What is it about women that make them want to turn the heating on full blast and open windows?
    Originally posted by EdGasketTheSecond
    There's studies that show that women's comfort temperature is higher than men's. Don't you remember that air conditioning is now sexist?
    Never argue with stupid people, they will drag you down to their level and then beat you with experience.
    - Mark Twain
    Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
    • justme111
    • By justme111 7th Jan 18, 11:24 AM
    • 2,906 Posts
    • 2,804 Thanks
    justme111
    Ha, yes. What is it about women that make them want to turn the heating on full blast and open windows?
    Originally posted by EdGasketTheSecond
    wanting fresh air and not being frozen while having it?
    • greatkingrat
    • By greatkingrat 7th Jan 18, 11:39 AM
    • 75 Posts
    • 77 Thanks
    greatkingrat
    Don't forget that if you own your own property, there is always the option of some form of equity release scheme to generate extra income.
    • WillowCat
    • By WillowCat 7th Jan 18, 12:46 PM
    • 755 Posts
    • 900 Thanks
    WillowCat
    State pension is at the core of my retirement planning. Two of them would actually give us a greater income than we have currently. I have a decent wodge of private pension which will give fun money/travel money/new roof fund, and will also give the extra cash when one of us is no longer around.

    I think I read somewhere that to buy an equivalent indexed linked annuity to give the same income as a state pension would cost between £200 - £250k. So a couple has near enough half a million in retirement assets with state pension alone.
    • Ashingtonian
    • By Ashingtonian 7th Jan 18, 12:57 PM
    • 135 Posts
    • 102 Thanks
    Ashingtonian
    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 2023
    • Andy L
    • By Andy L 7th Jan 18, 1:29 PM
    • 8,715 Posts
    • 7,095 Thanks
    Andy L
    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.
    Originally posted by kidmugsy
    Dont pensioners get the telly license free anyway?
    • Bogof_Babe
    • By Bogof_Babe 7th Jan 18, 1:36 PM
    • 10,044 Posts
    • 16,022 Thanks
    Bogof_Babe
    Dont pensioners get the telly license free anyway?
    Originally posted by Andy L
    Over 75, and I wouldn't bank on that forever.
    I haven't bogged off yet, and I ain't no babe


    • TheShape
    • By TheShape 7th Jan 18, 2:19 PM
    • 1,186 Posts
    • 971 Thanks
    TheShape
    Actually thanks to Boris, there is an Oyster 60 pass for all those living in the London boroughs for an initial fee of £10!
    Originally posted by janb5
    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.
    • bostonerimus
    • By bostonerimus 7th Jan 18, 3:05 PM
    • 1,424 Posts
    • 837 Thanks
    bostonerimus
    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.
    Last edited by bostonerimus; 07-01-2018 at 3:07 PM.
    Misanthrope in search of similar for mutual loathing
    • WobblyDog
    • By WobblyDog 7th Jan 18, 3:07 PM
    • 449 Posts
    • 288 Thanks
    WobblyDog
    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.
    • Silvertabby
    • By Silvertabby 7th Jan 18, 3:22 PM
    • 2,130 Posts
    • 2,845 Thanks
    Silvertabby
    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
    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.

    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.
    • capital0ne
    • By capital0ne 7th Jan 18, 3:42 PM
    • 267 Posts
    • 133 Thanks
    capital0ne
    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.
    • Silvertabby
    • By Silvertabby 7th Jan 18, 3:45 PM
    • 2,130 Posts
    • 2,845 Thanks
    Silvertabby
    Which is partly why Greece is all but bankrupt !
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