How much to live on

[Deleted User]

One of  the advantages of being single is being able to be financially responsible for just yourself. At the moment I do share some household bills with an older relative but know I can easily afford to pay them myself should the need arise.

I believe those in relationships who are dependent on just two state pensions are those most at risk in this situation. Of course this may also depend on other assets available.

Having to pay pay rent through retirement on a limited income must also be very worrying for some people.

Life assurance policies can help as long as previously taken out. Council tax single person discount can be a help as can pension credit.

For homeowners equity release and downsizing can be options too. Best to have some plan in place so you get on on with living!

I know Nationwide now offer later life mortgages for people up to their 90s both interest only and repayment. Obviously you need a certain amount of pension income.

Generally, I believe there are more options available nowadays.

Dazza1902

Renting in later life must make early / retirement difficult. We don't hear much from renters, minimum rents would put an extra 7+ k on a person's number. How do people manage ?
I was of the understanding that the new pension was meant to lift retiree's about benefits , so if a person only had their state pension , would they get help with rent / council tax? If so , having a small pension on top of state pension would surely just lose a person some benefits?
 At least with a mortgage there's an end date, glad mines finished
 
 

[Deleted User]

I believe if you have a weekly pension income of £177.10 you do not qualify for pension credit. £270 for couples. I think at that level if you were renting you would get help with rents and council tax but its an unknown area for me. Hopefully, as time passes, more and more people will have occupational pensions as well as state pension. I am so grateful I have mine.

MovingForwards

There is housing benefit for retired people, but it depends on their income.

Obviously those in local authority or housing association properties are as stable as owning, it's the ones in private rentals could be in a precarious position later in life. I know I wouldn't fancy having to find somewhere, pack and move, but I guess at that stage LA or HA would step up and potentially house them.

GunJack

PennyForThem_2 said:

What worries me with this thread is that most of you are couples and relying on a couples' income.  Have any of you thought about when one of you dies?  What then?  Has the survivor got enough to live on?

(Been there, done that which is why I ask this question.)

Yes, and I believe we're boxed off...

assuming I've retired as planned by 61/62 with mortgage cleared:-

If anything happens to me Mrs.G-J gets half of my 2xDB pensions, plus her PIP, so she'll be ok. When her SP starts she'll also retain PIP or it'll convert to Attendance Allowance (as her health conditions will still be present) so she'll have SP+PIP/AA+half my DBs.

If I survive her, I'll have my 2xDB+SP when I get there...

We'll also have cash in the bank from my DB lump sums. Mrs G-J has been too ill to work for many years so we've always only had one income plus her benefit.

If anything happens before I retire and clear the mortgage, my Death In-Service and other life insurance will see her more than right for the mortgage and more besides, plus the survivor's pensions paid immediately...

In fact, I'm probably worth far more dead right now 

 

PennyForThem_2

OK
Those on DB pensions probably are fine - the pension is paid automatically (usully 50%) to the survivor.

My big question is if you who do all the financial planning die - does your partner know how to manipulate the finance to the best to provide them with an income?   Some of your partners will.  I am not talking to those ppl who have thought and communicated very thoroughly how this will progress after they die.  It is the others.  

I was really, really lucky in that it fell into place and most of my deceased partener's pensions were DB pensions - but just putting this out as a caveat.  Even one person who thinks - yeah, umm not done this makes this post worthwhile.........

Dazza1902

Very much see your point. If I died B4 my wife , she would get some dB benefits but not enough to live off. She has never taken interest in our finances and would spend my DC pot on the kids, the house, herself until is was gone. Wouldn't give  any thought to long term provision ( even if she was in good health).
Seems that not too many couples both take a keen interest in finances.

hugheskevi

PennyForThem_2 said:

Those on DB pensions probably are fine - the pension is paid automatically (usully 50%) to the survivor.

I would say the opposite, that those with DC pensions are fine (assuming the household's initial pension planning prior to the death was adequate), and it is those with DB pensions and those with heavy dependence on State Pension that need to be careful.

Equivalence scales suggest a single adult needs about 60-67% of the income of a couple to have the same standard of living.

As the post 2016 State Pension system matures, usually State Pension income of the household will fall by 50% on death of a partner, as all of their State Pension income is removed. The position is more complicated for those who reached State Pension age before 2016, where typically the female partner in particular would get a higher State Pension upon the death of their spouse.

100% of DC pension passes to the surviving partner so death does not affect resources provided from DC pension but will reduce demands on the available resources. Once State Pension is taken into account it would not be surprising for the surviving individual to have more resources than needed to provide a comparable standard of living to when living as part of a couple.

For DB pension, the post 2015 public service pension schemes often only have survivor benefits of one-third the original pension. Even for new joiners to the Civil Service after 2002 the survivor benefits were only 37.5% of pension, so for some time survivor benefits have been at a level which will leave the surviving spouse quite considerably worse off, far below what is required to maintain living standards. Although if the pension was taken early with actuarial reduction, the survivor percentage will be higher, as the survivor benefit is usually based on the unreduced pension.

So it is very important to understand what payments from Defined Benefit and State Pensions will be after the death of each individual partner, as there can be some nasty surprises otherwise.

blue.peter

hugheskevi said:

100% of DC pension passes to the surviving partner so death does not affect resources provided from DC pension but will reduce demands on the available resources.

You appear to be thinking primarily about death before retirement. For death after retirement, it can be very different story: it depends on the choices made at retirement. In particular, some people will prefer to use the DC fund to buy an annuity*. In this case, the survivor's benefits are determined at the point of annuity purchase. I'd like to think that people will think about a dependant's annuity inb the context of a partner's needs, but suspect that not everyone will.

*Yes, I know that annuity rates are very poor at the moment, and have been for several years. Nonetheless, an annuity does give the advantage of certainty of income, and this is attractive to some.

runningromani

Hi all, I have read this thread with huge interest and this feels like a nice and safe place to post. I am on the cusp of taking early retirement at 55 in April but feel apprehensive. I'd intended to go at 58 but circumstances have changed which I'll explain below. First some  figures:

My estimated pension circa £19250 pa 

Lump sum £50,000

Wife pension £3000 pa 

Lump sum £2500

Savings £20000

Small lump sum from a private pension circa £4,000 - earmarked for son. Annual remaining pension peanuts.

House value circa £280,000 so future downsizing an option in the future.

We will have mum in laws house to sell circa £135000 one of the unexpected and sad changes in circumstances.

Now there are some calculated deductions, £5000 to relatives at wife's mum in laws request, £5000 to finish house improvements (future proofed property) and daughters wedding. Only big things that may need in future is a new boiler or heat pump? Fingers crossed property in good repair but you never know.

Mum in laws wishes and wife's dream was to own a caravan for the family in Devon, this we are already doing with a loan to be repaid from the inheritance which will cost £30,000 and we have paid deposit. We will cover site fees and utilities by renting out peak months only. It's a one off purchase that we have written 100% of that money off and are comfortable with that. 

I have done the maths and our combined pensions will cover all our outgoings (no mortgage, kids grown up and left home, doing well) no debts. Deducted tax over £12500. Allowing us to run 2 cars, 1 nearly new so no worries there, meals out but nothing lavish. Also, and this I struggle with, no longer able to save anything bar a bond of £25 per month. We do like an expensive holiday every 18 months or so, I like a beer and nice coffee, wife a few treats but nothing huge. We don't feel we need stuff or latest phone etc. We will use some capital whilst we can to travel. I'm mindful we need capital to last 12 years until state pensions kick in, wife just turned 55, so will be very careful at first. We have agreed to hold an emergency fund of £60,000, and I want £10,000 towards one final nice car (my weak point I own an old mx5 and like my mid life crisis cars), will be happy to run the next one into ground. So doing the sums we will have about £100,000 capital to last 12 years until SRP (due full pensions each) for extras and holidays on top of pensions (keeping that £60,000 tucked away). I have quite a bit of stuff to sell on eBay as I used to collect vintage toy cars and I hope to sell £50 minimum a month. I'm also happy to take Christmas jobs for a few years if needs be but want the summers for the caravan. We will spend very little when away apart from petrol to get there and back and food.

So, I mentioned I'd give some reasons for bringing forward (apart from inheritance that is apart of this), we have had two terrible years, seen close family die, good friends younger with cancer and I'm really not enjoying work anymore, it's very stressful, I'm getting cynical and not helped by a new boss and of course the pandemic made us appreciate the simpler things in life. My wife has had an industrial accident and is only now just going back to work, she too has had enough, we both started work at 16. Where I feel anxious is that we're enjoying having some serious money for the first time in our lives and it's nice not to think about buying odd things, but more importantly I don't want to feel I'm leaving due to a bad boss, I've been a civil servant 37 years and worked my way up from the bottom to a senior position and want go with my head held high. Also I enjoy some kudos in my role. Not really points relevant to this thread I know as more philosophical but they add to the mix so to speak. So very mixed emotions at the moment. My views change daily. 

The primary reason for this post is to see if I've missed anything glaringly obvious financially, I'm not a risk taker (despite a programme and risk manager by trade 😂) we can't loose the house, the kids are sorted, we will just need to be careful at times and a bit more measured which I've always essentially done until last year or so where I've spent a bit more. I do think it's time for us now. I look forward to seeing your thoughts and challenges, many thanks in anticipation, RR.