How much to live on

SouthCoastBoy

savingpennies said:

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

I've definitely thought of this, and I guess that is one of the benefits of having the majority of pension as a DC pension, my wife is the nominated beneficiary so if the trustees agree she should inherit the pension. She doesn't have any DC pension but a small DB pension. The bigger issue is the mgmt of the DC pension.

At state pension age she will have an income of around 25k per year before tax, in today's money, plus whatever is left of the DC pot. I will have less, an income of around 18k per year before tax plus DC pot.

Plasticman

Organgrinder said:

savingpennies said:

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

Roughly half of my annual pensions transfer to my wife. From memory the actual figure is about £10k pa. In addition she will have her own pension of £7k pa. 

On the face of it that will make things tough till 67. If however I pass before I retire she'll get a lump sum of over £100k. 

In addition there will be around £100k in investments/savings and another pension pot of around £80k. 

And of course at 67 the state pension. At 67 her income would be £29k pa. From 60-67 she'd have £17k plus the ability to draw down on some £180k or so. Taking the equivalent of the state pension should still leave her with savings of approx £100k.

It's something I've made sure has been thought though.

Similar - my wife will have an income of £28k for life through a mix of my DB pension, her (small) DB pension, her DC pension and savings. 

At some point soon I really need to document it as a plan though so somebody can help her with it if needed. She would struggle to manage it all herself I suspect. 

hugheskevi

It can be important to consider how the tax position will change once one person in a couple dies.

Based on our combined DB and State Pensions, my wife and I would pay slightly over 14% income tax if they were in payment today.

But if my wife were to die and I received a survivor benefit from her DB pension, I would pay nearly 19% income tax, compounding the loss of income from her pensions.

I keep an automated record of our gross and net position as we accrue more pension and tax rates and allowances change:

savingpennies

hugheskevi said:

It can be important to consider how the tax position will change once one person in a couple dies.

Based on our combined DB and State Pensions, my wife and I would pay slightly over 14% income tax if they were in payment today.

But if my wife were to die and I received a survivor benefit from her DB pension, I would pay nearly 19% income tax, compounding the loss of income from her pensions.

I keep an automated record of our gross and net position as we accrue more pension and tax rates and allowances change:

Yes, I should have added, that taxation also has  to be factored in.  

[Deleted User]

One of the advantages of remaining single lol You never have to worry about the 'other half' financially!

MarzipanCrumble

Almost as important as the question ' will my surviving partner have enough to live on' is 'do they know how it all works'.  This includes how to manage all the financial aspects of a household, plus any quirks only one of yu manages/knows about.

Organgrinder

MarzipanCrumble said:

Almost as important as the question ' will my surviving partner have enough to live on' is 'do they know how it all works'.  This includes how to manage all the financial aspects of a household, plus any quirks only one of yu manages/knows about.

I have another spreadsheet listing every account and their balances, income details etc. However I really need to sort this all out.

I wonder if anyone offers a service that does this. It strikes me as a necessary evil maybe.

BrilliantButScary

savingpennies said:

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

@savingpennies this is so important, and even more so if you are in an age gap relationship. We have had to navigate this as as a couple. It has been more challenging as well, with changes to the state pension age (particularly for women) and changes to the NRA with occupational pensions. We have bridged one gap to SPA, and are now bridging the second. 

My condolences on your husband's death.
 

Albermarle

Plasticman said:

Organgrinder said:

savingpennies said:

I haven't read all the way through this thread but wonder if, those who are part of a couple, have thought about what happens if one of you passes away.  I am 67, and finished working at 57, my husband was 60 at the time and had finished working at 59.  My OH died last September, and whilst I am quite comfortable, 40% of what had been our income disappeared overnight.  Similarly, my sil's brother died exactly 8 days after my OH, suddenly at 59, leaving his widow, having to ponder working for longer than she intended.  I know when I talk to friends and family, not many have thought about this part of their pension planning.  

Roughly half of my annual pensions transfer to my wife. From memory the actual figure is about £10k pa. In addition she will have her own pension of £7k pa. 

On the face of it that will make things tough till 67. If however I pass before I retire she'll get a lump sum of over £100k. 

In addition there will be around £100k in investments/savings and another pension pot of around £80k. 

And of course at 67 the state pension. At 67 her income would be £29k pa. From 60-67 she'd have £17k plus the ability to draw down on some £180k or so. Taking the equivalent of the state pension should still leave her with savings of approx £100k.

It's something I've made sure has been thought though.

Similar - my wife will have an income of £28k for life through a mix of my DB pension, her (small) DB pension, her DC pension and savings. 

At some point soon I really need to document it as a plan though so somebody can help her with it if needed. She would struggle to manage it all herself I suspect. 

On the Investments and Pensions board this issue also crops up from time to time. It seems common that one partner is interested and active with personal finance issues, ( the one posting on the forum of course) and the other partner is disinterested, and/or has not got the sort of mind that can easily deal with these issues.
One suggestion is to simplify your finances as much as possible, such as stop opening numerous bank and savings accounts and maybe buy an annuity with your DC pensions.
Another is to engage an IFA, even if that has not been your preferred way of working so far, and get the disinterested partner at least along for a couple of meetings, so they have a contact if you pass first.
You would have to take a view at what age would be a good time to do this. Although as in previous posts, people do unfortunately die at unexpectedly 'young' ages, most people have a pretty good chance of reaching 75.
For DIY investor types, it could be difficult to hand over the reins to an advisor, but it could certainly smooth the way at a later stage.

kempiejon

I have a disinterested other, their private provision should suffice. If I predecease my DC plan throws a regular income and can be sold down as the income and capital is all gravy. If I defy the odds and survive, the extra benefits give me a new hobby - to usefully dispose of them.