Comfortable Pension for a Single Person

JillyC8

I read a lot on these boards and am often surprised at how much people 'need' to live on in retirement.
Of course this depends on lifestyle choices, but for a single person who is a non-drinker, occasional holiday maybe once a year somewhere like Spain, small car, no mortgage and living a fairly simple lifestyle, I wonder what opinions are on here with regard to how much a year pension one would need?

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ermine

JillyC8 wrote: »

I wonder what opinions are on here with regard to how much a year pension one would need?

I've heard a few times that a couple can live a reasonable middle class lifestyle on about 25k-ish, a single person needs less, but probably not half as much. It seems hard to live well on just the State pension of ~£8 and a bit k p.a.


You could do worse than track your expenditure over a year and get the answer for you. Landlords typically allocate 1-2% of the house value p.a. for repairs, an owner-occupier is less hard on the fabric of the house but it's a starting point, though hose repairs are lumpy, so add that in as well as your bills, council tax, car costs etc. You won't have travel to and from work, you don't need to live somewhere dear like London. On the other hand you need to heat your home during the day, and your daily activities may involve spending money which you wouldn't have done at work.

JillyC8

There is so much in the media about people needing at least £200-£250k pot to have a comfortable retirement, but seriously I don't know many people around my age, in the 50+ age range that expect to have that at retirement.
I live quite frugally and don't indulge that often, apart from a holiday now and then, but generally don't live to excess. I guess the big unknowns would be around property maintenance. i have a small DB pension and should get full state so would expect my income to be aroun £16000 before tax in today's figures.

snowqueen555

It is a difficult figure to look at for those like myself who don't own a home. I don't know whether to factor in the cost of renting until death, or being able to buy a house in a few years time.

As it stands, living right now I could live on £12k a year, but feel like a very comfortable retirement I would need £15k+

That may seem a low figure for some people on here, but I only earn low 20k so getting a pension of 75% of my current salary is probably impossible.

drumtochty

We have a sensible lady friend who has a nice standard of living but watches the what she spends. She owns her own house, runs a car replaced every 5 years and has a few sensible holidays a year.


She has worked out that she will not have to cut her cloth if she has a retirement income before tax of £18,000 a year plus inflation as of today. She considers that there will be no issues on that income.


Her state pension when she hits state pension age will be £9,600 at todays rate and she has a suggested income from her db pension of £9,500 at todays rates on a 3% a year increaseing income.


She has monitored her expenditure for a few years and has no worries.

akh43

I am in a similar lifestyle position to you and have recently taken early retirement at 60 on £13k DB pension which is more than enough for my needs. When I am 66 that will increase when state pension kicks in.

I was paying AVCs for 4 years before retiring to increase my pension and for last couple of years put in so much it took me out of the tax bracket and was living on £100-£200 less than I am now getting as pension and had no problems living on that income and even saved some.

Maybe work out what your potential outgoings will be on retirement and try living on that lower income for a while to give you an idea of whether you can comfortably manage on it

shinytop

https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p


Have a look at this. It's aimed at couples but gives you an idea.

marlot

I wanted to base my retirement income on what I actually spent, not what others were doing.

I uploaded my bank statements for 4 years before I retired. Separated out one-offs, such as replacing the car to get to a day-to-day spend. Subtracted spend which stopped when I finished work. Added in likely costs of new hobbies.

I then added in some allowances for major spend items (house/car/charitable) and worked to that.


I then did some cashflow forecasts showing where I'd be each year - what income I was expecting, what I was likely to spend, how much I'd be depleting my savings. You can keep this simple, or you can try to model inflation and its effect on your plans.

Brilley

The Which annuity rates seem very optimistic?

System

Thank you so much for this thread. Great to read about people in more typical circumstances. I am single male 60. I currently have a db pension and small AVC annuity that gives me just over £18000 a year. I took both a little early. I manage quite well on this amount. I also save every month into a higher interest regular saver to cover the bigger annual bills and a regular amount into a S&S ISA. I have no debt and own my own home. I also have the remainder of a lump sum in the bank. I used some to pay off mortgage and become debt free.
I returned to work last September not because I had too but because I enjoyed it. The salary I am earning is mostly saved and I am also paying into a new career average pension. I was contracted out for many years so the NI payments are helping me pay towards the new full pension. I shall continue to pay these voluntarily when I stop working to achieve that full pension at 66.
Although working again the pressure is off because I know I can live on my current pension and can stop work should I wish too. I am contemplating one more year maybe. I do not work full time though.
I estimate that at 66 my total pension income will be about £27000 pa which includes state pension, small annuity, plus the db pension and a small amount from the career average one.
Having done the calculations for a single person this is a decent amount.
Finally if you do return to work even part time don't ignore any pensions on offer. In just one year I will have accrued another £500 a year pension index linked from age 66 to add to my db one.
Thanks again for this thread.

MancJonny

Thanks to JillyC8 for kicking-off a thread that reflects very well the real-life circumstances and incomes of people in retirement.

Call it a "worm's-eye view", but I, like other contributors to this thread so far, am constantly surprised (dismayed?) at the expectations of people in respect of their income-levels when retired.

So much of the information & advice proffered by "experts" on this matter - not, I emphasise, on MSE forums! - does seem to apply only to what I and many others would consider to be pretty well-off individuals. I don't in any way begrudge these people their pension-incomes, but they are perhaps not "typical" of retirees generally.

When I throw in the towel in a year or two, I will not, even with a Civil Service DB pension, be well-off by any means. Most people retiring from "ordinary" jobs, and then drawing "average" pensions, can only gawp at the (to us) eye-watering levels of income of a few retirees, even though, as I say, those incomes have (in most cases) been earned by hard work and thrift.