How to get a pension of £20000

MPD

http://www.bbc.co.uk/news/business-38609422

Normally I like the BBC but this article seems to be poorly constructed at best.

According to the ONS the average retired household spends £21770 pa, so here is guidance on getting an individual income of £20000 pa in retirement.

Mr.Generous

Didn't realise that, I'm planning on retiring on about £25k before tax and was thinking we'd be reasonably comfortable. I don't spend that much now I don't think. Bowls and bingo must be blinking expensive.

Triumph13

Good grief! Only RPI plus 0.5% on your investments and then a joint life indexed annuity? They might as well say "Just give us all your money". And how many people will not understand that the numbers are massively inflated by those assumptions and just give up in the belief that getting a decent pension is impossible?

GunJack

Mr.Generous wrote: »

Didn't realise that, I'm planning on retiring on about £25k before tax and was thinking we'd be reasonably comfortable. I don't spend that much now I don't think. Bowls and bingo must be blinking expensive.

Spending £22000 needs around £25k income, don't forget you'll pay tax on the £25k. You'll need slightly less income than £25k if it can be split between two of you and use 2x personal tax allowance to be able to spend £22k IYSWIM.

michaels

I couldn't even figure out whether they were looking to get an annuity of 20k so potentially 28k with a state pension on top or 20k in total....

molerat

michaels wrote: »

I couldn't even figure out whether they were looking to get an annuity of 20k so potentially 28k with a state pension on top or 20k in total....

The article quotes £8K SP + £12K other income.

molerat

One quote from the article that needs emphasising

One financial advisory firm, the deVere Group, said this week that 80% of the people it sees are not saving enough.
"Too many people have a live-for-today attitude," said chief executive Nigel Green.
"There needs to be a seismic shift in the savings culture."

Obviously a vested interest but still a very valid point.
Also the maximum of what can be expected from the state pension needs to be taken into account, £14800 from the old against the new £8100 !

Thrugelmir

molerat wrote: »

Obviously a vested interest but still a very valid point.

Stating the obvious isn't a vested interest. Level of savings are at all time lows. Those going to be a generation of hard up pensioners. If people don't take responsibility for their own futures.

jamesd

I wonder why the single person was told to buy a dual life annuity? Maybe because getting to 20k of income with two 8k state pensions would have been too cheap?

It's really very cheap to get to good household income levels. Even someone on minimum wage can cheaply get to 80% of their income in retirement if they start reasonably early.

Snakey

As the state pension age rises there needs to be more about early retirement. These articles blithely assume that you'll be working full-time to 67 or 70 i.e. no health issues, redundancies or elder care responsibilities. If you can't, there'll be a double hit on any annuity you might want to buy (more years to fund and a smaller pot size to fund it with), and the £8k state pension won't be there to make up the numbers for you yet either.

They also need to move away from the unspoken assumption that you'll have a mortgage-free roof over your head, and that you'll have to support a spouse (to whom you'll still be married) who has never worked. Maybe that is still true of the typical retiree today, I don't know, but it won't be the norm in forty years' time.

I don't like the scaremongering way they pick all of the worst-case scenarios and make out that if you can't afford to pay in £££s starting today then you might as well not bother. We should be giving people in their twenties a reasonably positive scenario to get them to start, and then have them looking at it more realistically after a decade or so once they're in the habit and have some funds under their belts.

ischofie1

Triumph13 wrote: »

Good grief! Only RPI plus 0.5% on your investments and then a joint life indexed annuity? They might as well say "Just give us all your money". And how many people will not understand that the numbers are massively inflated by those assumptions and just give up in the belief that getting a decent pension is impossible?

I couldn't agree with you more.
Someone starting a pension at say 25 would be prudent to be in high volatile equities for at least the 1st 20 years.
If this only returned RPI + 0.5% I'd be amazed.
It's articles like this that puts people off starting.