Pensions Planning: The NUMBER

Grumpy_chap

So, the BBC is reporting what "the number" needs to be (after tax) for various standards of retirement:

https://www.bbc.co.uk/news/articles/c3928m30v89o

RetirementStandard	Single	Couple
Minimum	£13,900	£22,500
Moderate	£32,700	£45,400
Comfortable	£45,400	£62,700

It occurs to me that the "minimum" in the above will be met by SP alone in very many cases, yet the article suggests 82% would reach the minimum standard. That means 18% would fall short of that level.

It also occurs to me that a good number of people never reach that "comfortable" level at any point in their life-times. Indeed, not everyone will reach the "moderate" level at any any point in their life-time.

michaels

https://forums.moneysavingexpert.com/discussion/comment/82021473#Comment_82021473

I guess all singletons only on the state pension or pension credit won't reach that level, also couples who rely on pension credit? (Although pension credit in reality is a gateway to a lot of other goodies that almost certainly lower the requirement)

In general I find these numbers very unsatisfactory as I think they suggest people should be aiming for a higher standard of living in retirement than many have in employment, expecially if factoring the reduced expenses in retirment.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82021602#Comment_82021602

Indeed - for a couple of working age to have £62.5k after tax would require them to both be earning £39k or thereabouts. Joint salaries £78k. If the salary split between the couple is unequal then the total combined salaries will need to be rather higher still.

For many retired people, housing expense is much lower then when working as the mortgage has been cleared down (not applicable for renters). To counter that reduction in required income, a retired couple with comfortable income and the extra time afforded by not working might well spend rather more on leisure activities and holidays than they did whilst working. Could very easily be more than the mortgage was costing them.

MarriedWithKids89

https://forums.moneysavingexpert.com/discussion/comment/82016204#Comment_82016204

With reference to what I referred to as "Non-discretionary CAPEX" (irregular, but usually expensive unavoidable expenses like new windows, new boiler, replacing car, car/household repairs, etc.) we decided to average it out over our expected lifetime. However, some people prefer to just set aside a lump sum. Do whatever works best for you, just don't forget to take this type of potentially expensive expenditure into account.

For what it's worth, £28K is pretty close to what we budgeted for subsistence (essentials) and "Non-discretionary CAPEX", so your number (£40K) looks reasonable but, of course, everyone's retirement looks and costs different.