Comfort Pension Level

wary

Anyone any thoughts on this?
http://www.bbc.co.uk/news/business-27441009

Is 15K a good ballpark figure to be "comfortable" on in retirement? Presumably that article is just for one person but what would the joint retirement income be for a couple to live comfortably?

Very subjective and very much depends on circumstance of course ... but for a couple with no debts, I am at a stage whereby I'm considering at what age I could afford to retire and live a simple-but-comfortable lifestyle.

Goldiegirl

I think it would depend on individuals and what they wanted from their retirement, and also what levels of saving they had, and any debts they might have


My husband and myself are intending to retire next year. I'll be 55, he'll be 63. Our joint income from pensions that we are already receiving will be around £17,500. Both of us will be under the tax threshold so this will be tax free income.


We should be comfortable on this figure - we will live fairly simply from day to day, but this level of income allows for treats and outings, and we have savings we will use for bigger holidays. But it should be noted we don't have a mortgage or any other debts


My husband will get his state pension and another small private pension in October 2016. When we get that additional income, we will feel as if we are rolling in it!


So, yes, I think a figure of £15000 is reasonable for a simple but quite comfortable lifestyle

STAGEY

When I finally finish work next year our total income after tax will be around 17800. Except my husband will be taxed as a little over the threshold and I won't because I'll be under, the best of all worlds will be a pension income of around £10499 each £20998 - I wish! Hoping the transfer of some of my allowance will help a little.

Reaper

I suggest you read past the dreadful BBC Headline. The group they are talking about is actually those on £15,000 - £20,000, so let's say £17,500 average (i.e. not £15K)

The next problem is that "43% of people in that category felt financially comfortable". Or to put it another way 57% of people in the group were NOT financially comfortable.

Journalists should be kept well away from statistics!

atush

I agree, and I have to say 15K is low to me (to be comfortable) but everyone's definition of that will be different.

wary

Thanks all for the useful insight. 15K also seems low to me, although I haven't done any calculations.

Problem with this latest legislation is that should one decide to go down the non-annuity route, then it is more difficult to calculate the required level of provision for retirement as you don't know how long you will live for.

Agree with the criticisms about the BBC article. I once complained about an online news article which described a company's treatment as a statement of fact but was in fact a scam. I was appalled at the BBC's apathetic attitude that they're reported something as "news" which was actually untrue, and their complete lack of concern at the impact that such misreporting may have.

jblessing

Nor did it mention if that was a gross 15k or net of tax, though one presumes it was net. Most people seem to forget that pensions are taxable like any other income.

grey_gym_sock

"comfortable" is just a word - it doesn't really tell you anything. isn't "comfortably off" a euphemism for "moderately rich"?

if you wanted to work out whether ppl were doing OK on a certain income, you'd have to ask more concrete things, like: can you afford heat your home properly? do you struggle with budgeting each week? do you have any savings? have you had to stop doing things you used to do for lack of money? do you have anything left over to spend on little luxuries now and then? etc.

Freecall

I don’t want to put too much of a downer on this but without even thinking about it the following does not seem unreasonable (in very round figures) :

Council Tax £2k
Power and water £2k
Insurance/phone/internet other fixed costs £1k
Car (12000 miles at 40p) £4.8k

That’s £10k of the £15k gone and we haven’t even started to eat yet let alone clothe, entertain etc.

And what about replacement of home appliances? At 55 how many washing machines, cookers, dishwashers, fridges, TV’s, beds, sofa’s etc are you likely to need to replace. I bet most people have at least a dozen of these big ticket items with an average life expectancy meaning that between one and two will need replacing every year.

And this all assumes that you have a fairly basic lifestyle. Certainly no holidays or the like.

I think that most people underestimate their true cost of living. The only way for any individual to know for sure is to look at their total take home pay for say the past 5 years, subtract what savings have been put away and realise that the rest has been spent on maintaining their lifestyle.

That is how much you need.

Yes you can tinker around the edges and might give up a couple of things at retirement but costs will go up elsewhere.

Remember, any reduction in disposable income comes off the nice bits first. Ultimately you can’t do much about Council tax etc.

I don’t want to depress people but unless you have experience of living on £15k for years before, I think that adapting to such an income would be very difficult.

grey_gym_sock

why on earth would you drive 12,000 miles a year, if you're supposed to be retired? (unless the actual driving itself is your hobby?) that sounds like a very poorly organized life. for a start, you could get all your groceries delivered for a few hundred pounds in delivery charges per year.

i agree than the best place to start from is what you've actually been spending, and calculated from the money that's actually disappeared, not what you think you've spent. and then start adjusting it for retirement ...

a lot of work-related costs may drop out. e.g. driving long distances; clothes specifically for work; buying £5 sandwiches for lunch instead of making your own.

you can also save money by choosing the off-peak times/dates to go on holidays, and to the theatre/cinema, etc.

on the other hand, you may want to splash out on expensive holidays, etc, when you have to time.

overall, it's difficult to generalize, but many ppl end up happily spending less than they thought they would.

PasturesNew

That is £1,175/month after tax with no requirement for work travel, work clothes, work haircuts. If you owned your own, manageable, home, then it's loads.

Comparing it to working it's like earning £20k when you remove the need for travel/clothes/haircuts. £20k take home is £1379/month.

I'll be living on just the standard state pension, so not loaded.