Comfortable Pension for a Single Person

OldMusicGuy

JillyC8 wrote: »

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

Only you can answer that. Everyone is different, and it depends what you plan to do in retirement. Some people like to take holidays and spend time going out, others maybe not. So you need to do a detailed budget to identify your "number".

Simple things can make a big difference. For example, we have a dog and a cat and easily spend the best part of £2k on food and insurance each year.

Also, don't forget your spending patterns will change during retirement, They are typically higher during the "go go" years, will reduce as you reach the "go slow" years and could rise dramatically in the "no go" years if you need care.

marlot

MancJonny wrote: »

...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.

I've always lived a much more modest lifestyle than my peers. Every time I got a bonus or payrise I put the extra into the mortgage or pension. It meant driving an older car, having sandwiches for lunch etc.


At its peak, I was saving 70% of my gross salary (including employer contribution to my pension).


My plans took a knock when I was made redundant at 49, but I got a job in the civil service (but only paying half my previous salary), which made a good transitional job to retirement at 55.


I consider myself very fortunate, but as you say, there were also sacrifices on the way.

Anonymous101

I think there’s quite a range for a “normal” single person. Lots of variables but I think at the lower end for me would be around £15k raising towards £30k if I was still paying a mortgage and expecting to travel and drive a new ish car.

The only way to know where you stand us to track your spending and extrapolate the results out. You can then have a play with what the effects of adding in an extra holiday or buying a new car might be.

JillyC8

excelpaul wrote: »

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.

This sounds like an ideal scenario ... I would really like to be in this position, where I can work without the financial pressures I currently have. My projected income at retirement is forecast to be around £17000 including my state pension, which I felt happy about until I read all the posts on here and articles in the press about the amount required for a 'comfortable' retirement,i.e. at least a £250,000 pot!

I even intended to take an early lump sum at 55 to help reduce my mortgage, so this amount could well reduce. :eek:

It is a personal issue, its true, but I'd really like to read more about 'average earners' like myself who, despite working without a break since age 18, will only receive a modest pension compared to many posters on here. My pension suffered when I earned a reduced income for around eight years when I worked part time when the children were young and unfortunately, my ex-husband didn't want to discuss pensions as part of the divorce so I have had tried to build my earnings and pension up as best I can since.

I currently earn what I would call a 'decent' salary in the mid-£30,000s, and with two teenagers there isn't a lot left at the end of the month, but I know once they've become independent I will be able to live on so much less. I guess it comes from being forced into a situation where there is no choice but to live on less!

Great point about signing up to a pension in 60s, it all adds up... !

JillyC8

shinytop wrote: »

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.

This is helpful ... and quite optimistic.

bostonerimus

I don't see anyone mentioning "budget" yet....which is amazing. The most basic beginning to a financial plan is to do a budget. This will show you what you spend and where you spend it rather than trying to link income needs to your salary or the size of your pension pot. The budget will also show you areas where you might be over spending and allow you to sensibly reduce your expenses. Record everything you spend and put it into categories like "food", "rent/mortgage", "electricity", "phone" etc. Also even if you have state pension and a DB pension it's good to have some savings in the bank or an ISA that you can easily access in emergencies or for big one off expenses and I would still try to spend less than your retirement income so you are saving a little each month.

Before I retired I knew that my DB pension and rent from a flat I own would bring in £26k/year and that my annual spending was £20k so I would be ok if I was careful with my spending and I could save the excess for a "rainy day".

System

When I used the word ‘calculations’ I meant budget!

bostonerimus

excelpaul wrote: »

When I used the word ‘calculations’ I meant budget!

OK I didn't make that connection, it came across as a generic number for a "single person". It's important to realise that no one is entirely average and so you have to develop you own specific plan using your own data where ever possible.

JillyC8

bostonerimus wrote: »

I don't see anyone mentioning "budget" yet....which is amazing. The most basic beginning to a financial plan is to do a budget. This will show you what you spend and where you spend it rather than trying to link income needs to your salary or the size of your pension pot. The budget will also show you areas where you might be over spending and allow you to sensibly reduce your expenses. Record everything you spend and put it into categories like "food", "rent/mortgage", "electricity", "phone" etc. Also even if you have state pension and a DB pension it's good to have some savings in the bank or an ISA that you can easily access in emergencies or for big one off expenses and I would still try to spend less than your retirement income so you are saving a little each month.

Before I retired I knew that my DB pension and rent from a flat I own would bring in £26k/year and that my annual spending was £20k so I would be ok if I was careful with my spending and I could save the excess for a "rainy day".

I do have a detailed budget sheet that I work closely with at the moment. In fact it's one of the old MSE sheets I downloaded from this site years ago.

For me it's about working out what I'll need to spend once the children are independent and whether I'll access a lump sum at 55 etc. I think I'll be ok as long as I get rid of the mortgage.

I wanted to know if there were others out there in a similar situation to me financially, or are the MSE members just generally a lot better off :rotfl:

Nebulous2

I've mentioned before what was possibly the best piece of financial advice I got from a family friend when I left school in 1980.

He said 'It isn't what you earn which is important, its what you do with it. One man will keep a wife and family and save something on £80 a week. Another man will spend £120 a week on himself and have nothing to show for it.'

That's pretty much the same message as Charles Dickens gave us through Mr Micawber.

So what you need is to have a clear plan of what you need, not that of anyone else.