How much to live on

PennyForThem_2

And.......
To continue the caveat stuff:

If you are widowed - what if you re-marry? 

Beware widow's / widower's (db) pensions because they could stop depending on terms.  Check.  Also possibly state pension may be affected.  And any state benefits maybe re-assessed.

[Deleted User]

Great to see this thread has had over 100000 views!.   Here's to the next 100000 as well as welcoming new posters about their more typical 'how much to live on' plans and stories. 
Best wishes everyone!

RetSol

Great to see this thread has had over 100000 views!.

Awesome!! 

[Deleted User]

Hopefully we will see some more updates or new contributors to this thread soon!

PennyForThem_2

With inflation rampant and energy firms going bust 'how much to live on' where people are advocating their low income level seems w do need new posts as to how we can live on much greater outgoings.  If energy and transport goes up so does everything else.

DairyQueen

I have factored in a stepped to 20% inflationary increase in our 'number' between now and 2025. I have assumed a  smaller increase (in annual increments) to our (so called) inflation-proofed income (DB and SP). We had planned to stay just within specific tax thresholds (BRT for OH and zero tax for me) so that equals a drop in planned income in real terms.

We are fortunate to be in a situation where we are able to cut discretionary expenses so this will mean cheaper/less holidays, gifts, entertainment, and not a cut in essentials such as food and heating. Even so, this is not the start to retirement we had planned. We had hoped to make the most of our younger, most active years of retirement to travel and do all of the things that we have spent all of these decades saving for and planning to enjoy.

Even so, we are counting our blessings as so much of what we enjoy most (walks in the country and coast, gardening, the company of family and friends) is either free or cheap.

Dragon_Lily

DairyQueen said:

I have factored in a stepped to 20% inflationary increase in our 'number' between now and 2025. I have assumed a  smaller increase (in annual increments) to our (so called) inflation-proofed income (DB and SP). We had planned to stay just within specific tax thresholds (BRT for OH and zero tax for me) so that equals a drop in planned income in real terms.

We are fortunate to be in a situation where we are able to cut discretionary expenses so this will mean cheaper/less holidays, gifts, entertainment, and not a cut in essentials such as food and heating. Even so, this is not the start to retirement we had planned. We had hoped to make the most of our younger, most active years of retirement to travel and do all of the things that we have spent all of these decades saving for and planning to enjoy.

Even so, we are counting our blessings as so much of what we enjoy most (walks in the country and coast, gardening, the company of family and friends) is either free or cheap.

Me and my husband also count our blessings too and are fortunate not have to cut living expenses too much, although we try to keep our outgoings as low as possible and will be keeping an eye on heating costs with them about to rise.  We have a smart meter for electricity (gas is still old school) but I've noticed that the smart meter sometimes provides estimated readings.  We then have to do our own reading.  We're on a fixed tariff for both until Aug 2022. 

My husband recently retired in August and I'm finishing work at the end of the year.  We're pooling our pensions, which are mainly private and then giving ourselves some 'spending money' for hobbies etc.  Husband gets his SP next year -  My SPA is 10 yrs away as I'm 8 yrs younger than my husband.   We will have around £1600 per month which will more than cover bills of £900 - £1000 per month.  This will increase next year when my husband gets his SP.   We are also fortunate to have some savings which will help with any unexpected expenses we might have.    

hugheskevi

Today was a very good day on the pension front.

Previously, my understanding was that our pension scheme's survivor pension was based on the rate of pension after actuarial reduction for early payment. That was unfortunate, as the survivor benefits were not generous, at 37.5% of pension. Today however I discovered that what I had previously been told was inaccurate, and the survivor benefits are based on the rate of pension before actuarial reduction for early payment.

That changes things quite considerably, as now the survivor benefits will be 58% of the (reduced) pension in payment.

I had been planning to exchange some of the pension for enhanced survivor benefits, but with this new calculation and taking into account State Pension, the reduction in net income on the death of either myself or my wife would be 30%-35% from the net income we will have as a couple, which would be fine and so no need to exchange any pension.

The removal of that planned exchange has increased our annual pension by over £1,000 p/a (before tax)!

For those with Defined Benefit pensions, it is well worth ensuring you know the detail of survivor benefits, especially if one partner has considerably more pension than the other.

Bravepants

hugheskevi said:

Today was a very good day on the pension front.

Previously, my understanding was that our pension scheme's survivor pension was based on the rate of pension after actuarial reduction for early payment. That was unfortunate, as the survivor benefits were not generous, at 37.5% of pension. Today however I discovered that what I had previously been told was inaccurate, and the survivor benefits are based on the rate of pension before actuarial reduction for early payment.

That changes things quite considerably, as now the survivor benefits will be 58% of the (reduced) pension in payment.

I had been planning to exchange some of the pension for enhanced survivor benefits, but with this new calculation and taking into account State Pension, the reduction in net income on the death of either myself or my wife would be 30%-35% from the net income we will have as a couple, which would be fine and so no need to exchange any pension.

The removal of that planned exchange has increased our annual pension by over £1,000 p/a (before tax)!

For those with Defined Benefit pensions, it is well worth ensuring you know the detail of survivor benefits, especially if one partner has considerably more pension than the other.

Yes this was my understanding too! This is a very important post hugheskevi, thank you.

Can you please indicate the document/reference in which youu found the information?

hugheskevi

Bravepants said:

hugheskevi said:

Today was a very good day on the pension front.

Previously, my understanding was that our pension scheme's survivor pension was based on the rate of pension after actuarial reduction for early payment. That was unfortunate, as the survivor benefits were not generous, at 37.5% of pension. Today however I discovered that what I had previously been told was inaccurate, and the survivor benefits are based on the rate of pension before actuarial reduction for early payment.

That changes things quite considerably, as now the survivor benefits will be 58% of the (reduced) pension in payment.

I had been planning to exchange some of the pension for enhanced survivor benefits, but with this new calculation and taking into account State Pension, the reduction in net income on the death of either myself or my wife would be 30%-35% from the net income we will have as a couple, which would be fine and so no need to exchange any pension.

The removal of that planned exchange has increased our annual pension by over £1,000 p/a (before tax)!

For those with Defined Benefit pensions, it is well worth ensuring you know the detail of survivor benefits, especially if one partner has considerably more pension than the other.

Yes this was my understanding too! This is a very important post hugheskevi, thank you.

Can you please indicate the document/reference in which youu found the information?

Our scheme has 5 different legacy sections, all with different rules. Although the rules were clear in the more recent sections, in the section in which we have our pensions the rules were not definitive (which misled me, as why have different and ambiguous phrasing unless it is to do something different than the other schemes). The scheme rules are often extremely difficult to interpret, especially for the older schemes.

It is a source of personal frustration that most scheme literature is written for people who will never read it. Years of 'plain English' and 'simple' language campaigns have diluted most scheme literature to 'high level messaging' which omits key detail for anything other than the most straightforward situations as it is presumed it will be too difficult for most people to understand. There are also rarely more complex examples included, which are very useful when written by those who understand the scheme to show how things are applied in practice. In this case, most of the literature was silent on the point, and one entry was simply incorrect, saying that survivor benefits will be based on pension in payment when the individual dies (which further misled me, as it gave no reason to think that what I understood the situation to be was not accurate).

Getting things in writing from a scheme administrator is helpful (little point in calling on detailed points as the telephone folk are unlikely to know off the top of their head) but no guarantee.

In this case, it was just a question I happened to see answered on a Pension Awareness Week video that didn't chime with my understanding, so I queried it and found that my understanding was not correct.