Comfortable Pension for a Single Person

crv1963

We're a couple but........... in our planning we are aiming should (or when) one of us goes first to have a residual pension income for the survivor of around 18-20k pa, before SPA. In reality our figures would aim to be:-

Mrs CRV dies- I get my 16k DB + 4k pa from her DC pot plus residual monies in her SIPP to either draw income or keep invested to a later date.

I die- Mrs CRV gets 9.5k DB Survivors pension + 4k pa her DC pension + 6k draw down from her SIPP pot (which is exhausted by the time she reaches SPA) plus any residual savings I might leave.

I accept we have a combined income just over the current average salary- me 37k pa, her 23k pa. How we are achieving our savings rate is by working additional hours to prepare our home for retirement, pay down the mortgage etc.

BoxerfanUK

There is no one size fits all. It all depends on individual circumstances but as others have said, the most important thing is to work out what expenses you will no longer have in retirement compared to now.

Work out what things you spend on now that you MUST HAVE in retirement and see if you can reduce these must have costs, such as, switching energy suppliers, car insurance, home insurance, Tv subs etc etc. It's amazing how many people stick with the same providers and end up paying through the nose year after year. These costs can really add up.

Then work out what you pay for now that you won't need in retirement, travel to work costs, other insurances, loans that may be paid off by then, can you buy a more economical car, or, do you even need a car?

The real biggie is housing costs, do you rent, have a mortgage, will that mortgage be paid off by the time you retire. There is a very good thread on this board about your 'number', meaning after you've worked out and rationalized all your projected expenses in retirement you will arrive at the 'number' you need to live comfortably.

Once you have your number you can work out what you need to do to achieve that, company pension, state pension, SIPP etc.

The state pension on it's own would be very difficult to survive on alone, even if you own your own home with no mortgage, but if you have other pension income/savings to supplement it then it can increase your financial comfort level greatly when state pension finally kicks in. Have you obtained a state pension forecast to see if you will get the full amount?

Also, what age do you plan to retire at? If this is before state pension age how will you bridge the gap between finishing work and getting state pension.

I retired last year at 59 and am fortunate to have what I consider to be a good DB pension. It's not in the league of some people on here who band about company pensions of 50-60K and 1.5 million pots and I have to admit sometimes reading their posts leaves me feeling somewhat inadequate. I don't begrudge it, good luck to them, but the figures they mention are fantasy land for the average working person. Having said that, I still feel very grateful and lucky with what I have. I know people with little or no pension provision and I really wonder how they will ever survive. I guess they'll have to work 'til they drop :sad:

I never really thought about my final salary pension as such because being Civil Service I couldn't really add to it and I knew it would be enough. I was satisfied with the financial projections I had made so I concentrated on overpaying our Mortgage. However, a few years ago I really got thinking about my wife's pension provisions and together we decided to do something about that. Thanks to this board we've been able to make a real positive difference to her pension and god willing if we survive long enough will be better off in retirement than we are now!!!

There are lots of regular posters on this board that must spend hours helping strangers like me with (sometimes) stupid questions but thanks to their help I have learned an awful lot (and still am) and will be eternally grateful to them, so thank you MSE posters :beer::A

bostonerimus

JillyC8, if your budget is less than your 17k in pension income then you should be ok as long as the part in addition to the state pension is also index linked. You don’t necessarily need a lot of money in SIPPs, ISAs etc if you have reliable income coming in from other sources that cover your spending and you can save a bit each month and have an emergency fund. If you are at all worried take a look at your budget and try to economize before you retire as a bit of practice. Food is usually a good category to look at as it’s at the top of any budget along with housing and forcing yourself to get creative with meals can often save money and actually improve what you eat.....it’s a win win. I’ve been making a few of Merra Sodah’s recipies in the Guardian recently and they are cheap and tasty.

Remember there are two sides to all this: the income side and the spending side. You can control the spending side.

MancJonny

BoxerfanUK wrote: »

I retired last year at 59 and am fortunate to have what I consider to be a good DB pension. It's not in the league of some people on here who band about company pensions of 50-60K and 1.5 million pots and I have to admit sometimes reading their posts leaves me feeling somewhat inadequate. I don't begrudge it, good luck to them, but the figures they mention are fantasy land for the average working person. Having said that, I still feel very grateful and lucky with what I have. I know people with little or no pension provision and I really wonder how they will ever survive. I guess they'll have to work 'til they drop

Right-on, BoxerfanUK - those are fine words!

I subscribe to them unreservedly.

doingitanyway

Thanks for starting this thread. It is great to see retirement funds that look similar to where I will be. Given a choice between more time to use as I choose, or more money, I am in the more time camp

JillyC8

Nebulous2 wrote: »

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.

Wise words ... I like this.

Robert_McGeddon

JillyC8 wrote: »

This is helpful ... and quite optimistic.

And flakey. £267,800 can get an annuity of £26,000pa yet £615,500 only achieves an annuity of £39,000pa? I think treat the article with a pinch of salt.

Also, "income" in this thread seems sometimes to be quoted gross (before tax) whilst spending is post tax. Don't forget the tax! As gross income rises to £20K, £30K and above tax can make an impact.

tony4147

Robert_McGeddon wrote: »

And flakey. £267,800 can get an annuity of £26,000pa yet £615,500 only achieves an annuity of £39,000pa? I think treat the article with a pinch of salt.

Also, "income" in this thread seems sometimes to be quoted gross (before tax) whilst spending is post tax. Don't forget the tax! As gross income rises to £20K, £30K and above tax can make an impact.

What I would give for a rtn of £26k PA for £267.8k, amazing how things like this get published without even the facts being checked

happynot

I also have had to gulp a few times on reading other threads with peoples plans for retirement and how to fund it. I do not think I am envious, in fact I feel lucky that I was able to leave working (since 18, in the NHS and at that stage tired, disillusioned and borderline ill )in my mid/late 50's and live on a modest pension. I have around £15000 per year, some savings and hopefully my state pension (not too high as I was contracted out almost all my working life).


It helps that I am mortgage free and not interested in far flung travel. I use my bus pass and hope to undertake various courses and travel within UK / Europe, mainly interested in history.


My plans are on hold at the moment (life's events) - time IS more important than money, but I would hate to have to be totally frugal and reliant on benefits.

swindiff

The wife and I are planning for a combined income of around £47k between the ages of 60 and 67 and £40k from 67 on (after tax)
This is using a combination of workplace DB and DC pension, SIPP and state pension.