How much pension will a fund of £10,000 buy?

dunstonh

I was told that a pension fund of £100k gives you an income in retirement of circa £5k. Food for thought - it certainly put my pension into an unfavourable light!!

A 5% figure for income is used as a guide for any income generating investment irrespective of tax wrapper. It shouldnt put the pension in unfavourable light as the pension fund will be 25% higher than the alternatives.

atush

gadgetmind wrote: »

I understand they are now called hippies: House Is Pension.

No way would I have flogging my house as part of my pensions planning, not moving overseas as an unavoidable part of my retirement. I'm not saying I won't do these things, just that I don't want to be forced to.

I never intended to be a 'HIP'pie, but I suppose I may end up being. Only because my house will be too large when the 3 boys go, so will downsize and bank the rest of the cash. Will spend a huge wad first redeveloping it before I flog it though. I will upgrade the fixtures and fitting and flooring etc as we had to do it inexpensively when we built it 15 years ago.

We sensibly made other pension and saving arrangements as we had assumed we'd live in our house after paying off the mtg.

bendix

I don't know why anyone should think nearly £400 income is low for a pension pot of just over ten grand. Has the OP not looked at interest rates / bond yields etc today? 4% seems particularly good to me in 'today's market', to coin the OP's phrase.

What do you seriously think a pension pot of £10000 is going to provide? It's not a magic bean, capable of magically turning into an annual income of £20,000 per year.

If you were able to put that £10k in your building society, you would be lucky to get £150 a year.

usignuolo

Yes I did look up other pension providers and they nearly all offer between 500 and 600 pounds on £10000 fund, so 398 is on the low side. Also if OH survives to 80 (two years over UK average male life expectancy) they will still only have paid out £9600 which is less than the capital in the fund. Could just as well have left money in bank and withdrawn capital each year.

Don't know which building society you are in but mine pays 2.2% to 20% tax payers which I make £220 per annum on £10,000.

gadgetmind

usignuolo wrote: »

Yes I did look up other pension providers and they nearly all offer between 500 and 600 pounds on £10000 fund, so 398 is on the low side.

Are you comparing the side kind of annuity? 500-600 sounds like a flat rate and 398 like an escalating annuity.