Comfort Pension Level

Freecall

Cyberman60 wrote: »

I've never been happier and live on under 10K a year .....

........ I have an offset mortgage

Living on less than £10k pa with debts to pay as well as being happy, you are a true MSE God.

:A

Triumph13

kidmugsy wrote: »

It's quite cheering: a couple who can get into the £15k - £40k range ought to be in not too bad a position. Put another way, if the new style state pension gives a couple £15k p.a., anything they have saved (e.g. by way of non-state pension) puts them higher up in the £15k - £40k range, and the evidence is that they'd enjoy the extra income. They'd be wise to have an emergency fund too, though.

Has anyone resolved the question of whether they meant £15k after tax? I suppose they must have done.

It sounds fine with 2 STPs, but the study shows that most of the people below £15k and therefore struggling are women and most of these will be widows. If you have equal pensions as a couple, then for the survivor to still get £15k then as well as a full STP each you need either a £5k annuity / DB each with 50% survivor pension, or a DC pot yielding £7k pa (assuming you are married and can therefore pass it on tax free)

wary

Cyberman60 wrote: »

BTW I retired early fifties so still have the state pension to look forward to. I have no dependents which I must admit would make a huge difference to my circumstances. My car is 15 years old and I have done less than 10,000 miles in the last 5 years.

Good for you! You can't buy your youth back no matter how much money you retire with, and whilst many will think early-fifties is already past one's sell-by date, you know what I mean ... So well done for managing to retire early and enjoy an extra few work-free years.

I'm 52 now and aim to ramp up contributions over the next 3 years with a view to at least cutting back on work (I contract) when 55 (my lad will have finished school by then), if not stopping altogether. The main issue we have is that my wife has no pension and so we won't be able to make use of her tax-free threshold. However, we are looking to address this. Also, I'll be 75 before she gets her state pension.

I aim to lead a simple-but-happy work-free retirement. However, my wife has aspirations of retiring when I do (despite being 7 years younger) and of travelling the world, so I'm not sure she intends to lead the same frugal lifestyle as me!

Cyberman60

Another option to consider is downsizing if you have a house with a lot of equity, which is actually my aim in order to buy perhaps a yacht. I invested in a much larger house than I needed nearly 30 years ago with this in mind. Unfortunately, I've got used to my large house and it will be difficult letting go !!

Triumph13

Living_proof wrote: »

I don't have a private pension and I'm so delighted to get the new rate of pension when I retire in 2016. I don't have a mortgage but have a lodger so my house provides me with an income of about £300 per month (£250 adjusted for council tax) so I will have the best part of £1000 per month to live on and will have quite a bit of savings behind me. Everything is planned in advance and I can live very frugally. At the time of my marriage break-up I didn't have enough spare income to put into a pension - I was too busy supporting my children and paying the marital mortgage. Then when I could afford to pay into a pension it was too late and ISAs are a better choice. I think I will be better off than a lot of pensioners and my house is newish and incredibly warm and I may not plan a Caribbean cruise every year, but I think I will enjoy the challenge of being comfortable on a small income. It's all down to deciding what's a want and what's a need.

Hopefully someone has already said this to you, but GET A PENSION NOW!

Even with only 2 years to go there is a decent little bit of tax saving to be made if you have some money in ISAs that you don't mind locking away for a short while.

Your income from your lodger is below the £4,250 thresholdd so is tax free. If you are getting full STP of roughly £8k then you will have about £2,500 pa of unused personal allowance - call it £2,400 to make the numbers neater. If you contribute £2,560 into a pension this would be immediately increased to £3,200 by HMRC - a £640 profit. You could then take the whole lot out tax free in the first year of your retirement - £800 as a tax free lump sum and £2400 as taxable income below your personal allowance.
Put £5,120 in and get £4000 out in year 1 and £2400 in year 2
£10,140 would come out as £5,600 in year 1 and £2,400 in years 2,3 and 4

And that's without considering any employer's contributions if your employer has a scheme.

atush

kidmugsy wrote: »

It's quite cheering: a couple who can get into the £15k - £40k range ought to be in not too bad a position. Put another way, if the new style state pension gives a couple £15k p.a., anything they have saved (e.g. by way of non-state pension) puts them higher up in the £15k - £40k range, and the evidence is that they'd enjoy the extra income. They'd be wise to have an emergency fund too, though.

Has anyone resolved the question of whether they meant £15k after tax? I suppose they must have done.

Well if the 15K was for 2, there would be no tax so i'd say gross?

atush

Cyberman60 wrote: »

Another option to consider is downsizing if you have a house with a lot of equity, which is actually my aim in order to buy perhaps a yacht. I invested in a much larger house than I needed nearly 30 years ago with this in mind. Unfortunately, I've got used to my large house and it will be difficult letting go !!

10K per year wont even cover the mooring and maintenance for said yacht

atush

Triumph13 wrote: »

Hopefully someone has already said this to you, but GET A PENSION NOW!

Even with only 2 years to go there is a decent little bit of tax saving to be made if you have some money in ISAs that you don't mind locking away for a short while.

Your income from your lodger is below the £4,250 thresholdd so is tax free. If you are getting full STP of roughly £8k then you will have about £2,500 pa of unused personal allowance - call it £2,400 to make the numbers neater. If you contribute £2,560 into a pension this would be immediately increased to £3,200 by HMRC - a £640 profit. You could then take the whole lot out tax free in the first year of your retirement - £800 as a tax free lump sum and £2400 as taxable income below your personal allowance.
Put £5,120 in and get £4000 out in year 1 and £2400 in year 2
£10,140 would come out as £5,600 in year 1 and £2,400 in years 2,3 and 4

And that's without considering any employer's contributions if your employer has a scheme.

Yes earlier I did tell them to pay into a pension. But not sure they paid any attention.

PasturesNew

Out of interest, if state pension is £7,500 and so you'd need £7,500 to make it up to £15k/year .... how much would one need to be "in the pot" to generate that?

wary

PasturesNew wrote: »

Out of interest, if state pension is £7,500 and so you'd need £7,500 to make it up to £15k/year .... how much would one need to be "in the pot" to generate that?

If you mean taking an annuity then it depends on a number of factors but even if you don't take a 25% lump sum, you'd still need a pot in the order of £150K, I'd guess.

If you go with the new option of drawing the money as taxable income, you'd obviously need a pot of approx £7500 times the number of years that you intend to live during retirement.