Comfortable Pension for a Single Person

JillyC8

Agree these boards are so useful. Ive had some excellent advice, but it's a relief to see posts from so many people in a similar position to me. I knew next to nothing about my pensions six months ago, but have traced them down and learned so much and have a much healthier attitude towards money and saving.
The focus for me is splitting my spare money each month between overpaying the mortgage as much as I can, and also saving into an ISA. I have a DC pension with my current employer that I hope to be paying into for quite some years yet, plus two DB pensions which are small and roughly the equivalent of the state pension.
I'd like to be able to cut back to part time work by age 58/60 and retire by 64/65.

kev2009

Interesting read this thread. I too have always been amazed at how much people say they want/need as a pension. I'm single and at present whilst i have a some 20+ years to go before i can consider retiring as my pension age is due to rise to 68, i'm always amazed at how little the online calculator my pension provider has predicts I will get. Currently have 18% between myself and employer going into pension and it predicts only approx £9k a year pension.. which seems low, especialyl considering what which? article of which my pension pot is predicted to be more than the £200 odd k. I've based my pension at the moment on getting an annuity as I like the idea of a fixed amount with a % increase each year to help offset inflation, not keen on the draw down route as it sounds good BUT if the market crashes and you loose a chunk, your now stuck on a lower pension, I prefer the security of a fixed sum for the rest of my days when I get there and hoping to have enough that i don't have to worry about turning heating on etc. I haven't done the figures yet but i would like to have around 27k but forecasts predict around 9k year + state on top based on going at 65, if i go 68, then i think i get around 11k + state on top so still a shortfall but i'm hoping calculator forecast is off or funds make more. I feel that should be sufficient to pay bills & give money for new car, any hobbies or eating out and maybe few uk based holidays each year maybe long weekends away or something as well as property maintenance. Mortgage is currently due to end when i retire But i'm hoping to pay it off long before i retire but who knows if that will happen of not.

I'm also considering increasing contributions to 20% but not too sure atm. I want to get my mortgage lower as my 5 year fixed is up next year and i'd like to try and pay as much as i can off that this year & next to hopefully get a better/lower rate when i re-fix for 5 years potentially next year so might be putting off the pension contribution increase for a bit.

Kev

silverwhistle

kev2009 wrote: »

Interesting read this thread. I too have always been amazed at how much people say they want/need as a pension.

Yep, and then you go and look at some of the other boards and realise how out of touch some of us are.

I had VR at 45 and the reduced pension kicked in at 50. I've still worked in lower paid work, more recently on-line tutoring and translation, but that's tapering off. So my pension and solar panel income is around £1200 a month, maybe £100 a month last year for tutoring, and shares in an ISA whose dividend has been reinvested for years but is another potential £250+ a month.

That leaves me quite comfortable and I manage 2 weeks skiing a year: it helps to stay free in a friend's flat, and as you get older those sorts of reciprocal arrangements help. I'm probably going to chuck the fishing rod in the car this summer and head north; again staying a lot with friends and maybe even camping a bit. It's about time I visited the Highlands.. I might try and get some sailing in too, there's normally a need for crew down the sailing club. So you don't need to splash out large sums to be active..

I could and would work more if I needed to, but certainly not in FE, where the last time I worked a summer school I was exhausted and the pay, after allowing for non-contact and prep time, was perilously close to NMW.

The money I paid into the teachers pension scheme is so patchy that I need to get my contributions back as I'm below the de minimis level. Thanks to this thread for reminding me to claim!

selloptape

This has been an interesting read - I feel that I’m currently way behind where I need to be.

I will have a DB pension of approx £300 per annum, plus a DC pension pot of around £70k (if I contribute at the same rate as I currently am). Not sure if the state pension will still be available when I retire so need to up my pension savings in case it isn’t.

I’m late 30s so have some time to save more but there is a limit to what I can achieve on an average salary.

JillyC8

selloptape wrote: »

This has been an interesting read - I feel that I’m currently way behind where I need to be.

I will have a DB pension of approx £300 per annum, plus a DC pension pot of around £70k (if I contribute at the same rate as I currently am). Not sure if the state pension will still be available when I retire so need to up my pension savings in case it isn’t.

I’m late 30s so have some time to save more but there is a limit to what I can achieve on an average salary.

Good that you're thinking about this now though, with plenty of time to make a difference to your retirement income before the time comes. Although I knew I had a couple of deferred pensions, I didn't bother to look into them in detail until I'd turned 52!

MancJonny

JillyC8 wrote: »

Agree these boards are so useful. Ive had some excellent advice, but it's a relief to see posts from so many people in a similar position to me. I knew next to nothing about my pensions six months ago, but have traced them down and learned so much and have a much healthier attitude towards money and saving.

My experience, too.

This is the thread that got me hooked - it is absolutely essential reading for anyone with a public sector job / pension:
https://forums.moneysavingexpert.com/discussion/5899329/should-i-opt-out-of-the-civil-service-pension-scheme#topofpage

Marine_life

At the end of the day how much is the right sum for a single person (and indeed anybody) will depend upon the mix of spend between predictable / fixed and discretionary / variable. Or, simply speaking “needs and wants”. Defining what you need and what you want should form the basis of your spending plan.
When you can retire will depend on whether you can generate enough income (to fund the number that drops out of the first paragraph). That will depend on how much is coming from predictable sources (DB pensions, state pension, fixed interest savings) and how much from less predictable sources (investments). More risky investment may generate higher returns but will also be more volatile, meaning you could lose a large chunk of it.
You’ll want some buffer to cover the unexpected. The size of the buffer will depend upon what proportion of your retirement income requirement is coming from (volatile) investments, your attitude to risk and your ability to flex the “wants” side of your spending equation.

crv1963

BoxerfanUK wrote: »

Hi crv1963. The thing I love about this board is it often makes me think in a different way. We all like to think we know what we are doing (or planning to do) with our finances and then someone on this board comes along and says something and it makes me question the plan I have in my head and then leads me in a different direction, or at least to investigate the possibilities.

Long story short. Instead of paying the remaining 26K off the mortgage to save a moderate amount of interest, she made a single contribution of £21,045 into her pension towards the end of March and within days the pension provider added basic rate relief of £5,261 to her pension. She will now claim another £5,261 higher rate relief from HMRC. In addition, for March she Salary Sacrificed down to minimum wage, the result being she has managed to utilize ALL her unused carry forward from 2015/16 and some of 2016/17.

So, instead of saving a piddly amount of interest on the mortgage by paying it off we have (or will have) gained £5,261 x2 + 10% employer NI rebate into her pension for sacrificing down to minimum wage in March. A complete no brainer really, but it took someone else's comments on another thread to make me rethink our own strategy and with the help and guidance from some of the pension & tax gurus on this board they saved us (or gained us ) a small fortune.

Now we are on SVR mortgage the OP's will pay the mortgage off completely in 12 months :j:j

An interesting point. Has me thinking.....instead of overpaying or even paying off the mortgage when I get my TFLS maybe we should instead use that money to live off while pouring our real wages into pensions for the uplift- mines DB so doesn't trigger MAPPA. Bugslet said something similar elsewhere about retaining credit rating by retaining a small mortgage- worth thinking about if going in your 50s, clear by SPA?

I had a good discussion at work last night, a colleague has done just this, saves 80% of her earnings into a SIPP, uses her occupational pension and TFLS to live off- no accusations of recycling as can demonstrate via bank statements to HMRC if questions are asked.

VillageIdiot

I am 79, single and own my house. I have kept a spreadsheet of all I spend for years, so my information is deadly accurate.


My house is a modern four-bedroom bungalow, set in a few acres of Wales. I average about £1,000 to £1,500 a year on repairs and maintenance, included in “Capital Expenditure” below.


I love where I live and my lifestyle so much that I don’t take holidays. I hate being away. The novelty of eating out wore off long ago.


My car is three years old., and I average 4,000miles each year. I bought it when it was one year old, for £15,000, and it is probably the last car I will ever buy. Glaucoma and senility will take over.


My expenditure over the past 52 weeks is as follows.


£1,585 – Council Tax
£ 164 – Water
£ 272 – Electricity
£ 000 – Heating Oil (£256 in June 2017. Will need another £250 in June this year)
£ 312 - Phone, Broadband and Mobile
£1,181 - Food
£ 508 – Personal (i.e. Not included elsewhere.)
£ 386 - Car Fuel
£ 344 - Car Insurance, Tax & MOT
£ 82 - Car Servicing
£ 522 – Meals out
£ 174 - Clothes
£ 748 - House & Garden
£ 348 - Medical
£ 521 - “Days out”, Concerts, Alcohol
£ 347 - Fields
£ 497 – Horses (I part-own a horse)
£1,700 – Capital Expenditure


£9,691 – TOTAL


This does not include the cost of buying a car. For my 4,000 miles per year, I work on £15,000 divided by the 100,000 miles it should last, multiplied by 4,000, or £600 per year.
The car was bought with money out of savings, which would otherwise earn about 2%pa interest at the moment, so on the average value of the car over its life, that is another £150pa.
So a total of £750pa depreciation on the car,


When working out your annual costs, as someone else pointed out, there will be three phases to your retirement. At first you may want to “travel the world”, but after a very few years you will be more concerned about the distance to the nearest toilet than in seeing the sights, and the delights of travel soon ware off as you get more infirm. Then there is the Care Home stage!


So take into account that you will soon want to not even leave your house, let alone “travel the world” when working out your budget for retirement.

XRAT

It's a very difficult calculation, I based my retirement planning on not wanting to run out of money and return to work at 90!
Not all of the savings expected actually work out, or at least they didn't for me.
Having worked in London on an average wage I could only afford to commute from the outskirts. On retiring I moved to the country, there was little difference in the house prices, but the standard of living is so much nicer.
I saved the cost of the commuting, but need to travel back to see my aged parents, which is about the same, for the time being.
My children left home, saving a small fortune.., and moved to the other side of the world, so if I want to see them, it costs more than when they were at home.
The popular belief that I can spend the winter abroad on free holidays is shattered when you realise that kids around the world share a house these days, so there is no spare room.
I hope this gives you food for thought.
Like other posters here, I worked a few additional years, but once you know that you can hand in your notice any time you like, the pressure is off and work becomes more like a hobby.
When my employers couldn't understand that and thought they could make unreasonable demands, I left.