Standard of living - minimum, moderate or comfortable figures released today (12 January 2023)

michaels

DT2001 said:

michaels said:

eastcorkram said:

Kim1965 said:

A comfortable life style for a couple is derived from 2 x full sp, plus each having £325 dc sipps According to the research. 
 Most on this board would consider this level of assets to be inadequate. 

Do you mean £325 a week, month? Or did you mean a SIPP of £325k at retirement?

325k pot which they think will allow an SWR of 6%.....

The report assumes buying an annuity at 6.2%. They do state that rates vary etc etc.
From a quick look it wouldn’t be too far off for a 67 year old in some parts of the country.

I think the report is a starting point. As has been said we are all different so need to adapt/create our own budget and decide how to generate income - use an annuity, BTL, SWR from a pot, ISA’s etc

If you can get a fully indexed 100% spousal annuity paying more than the 'swr' then unless you are worried about inheritance it sounds like a no brainer.  Last time I looked annuity rates were in the 2.x% range.

Linton

michaels said:

DT2001 said:

michaels said:

eastcorkram said:

Kim1965 said:

A comfortable life style for a couple is derived from 2 x full sp, plus each having £325 dc sipps According to the research. 
 Most on this board would consider this level of assets to be inadequate. 

Do you mean £325 a week, month? Or did you mean a SIPP of £325k at retirement?

325k pot which they think will allow an SWR of 6%.....

The report assumes buying an annuity at 6.2%. They do state that rates vary etc etc.
From a quick look it wouldn’t be too far off for a 67 year old in some parts of the country.

I think the report is a starting point. As has been said we are all different so need to adapt/create our own budget and decide how to generate income - use an annuity, BTL, SWR from a pot, ISA’s etc

If you can get a fully indexed 100% spousal annuity paying more than the 'swr' then unless you are worried about inheritance it sounds like a no brainer.  Last time I looked annuity rates were in the 2.x% range.

You should look again - according to HL at 65 a single life RPI annuity is 4.3%, at 70 5.1%. Say 10% off for a joint life and its still well above SWR levels,

Flugelhorn

Are these figures for standards of living before or after tax?

JoeCrystal

Flugelhorn said:

Are these figures for standards of living before or after tax?

After tax and not including rents or mortgages. 

Flugelhorn

JoeCrystal said:

Flugelhorn said:

Are these figures for standards of living before or after tax?

After tax and not including rents or mortgages. 

thanks - presume most have paid mortgage by that stage but some will still be paying rent 

Albermarle

michaels said:

DT2001 said:

michaels said:

eastcorkram said:

Kim1965 said:

A comfortable life style for a couple is derived from 2 x full sp, plus each having £325 dc sipps According to the research. 
 Most on this board would consider this level of assets to be inadequate. 

Do you mean £325 a week, month? Or did you mean a SIPP of £325k at retirement?

325k pot which they think will allow an SWR of 6%.....

The report assumes buying an annuity at 6.2%. They do state that rates vary etc etc.
From a quick look it wouldn’t be too far off for a 67 year old in some parts of the country.

I think the report is a starting point. As has been said we are all different so need to adapt/create our own budget and decide how to generate income - use an annuity, BTL, SWR from a pot, ISA’s etc

If you can get a fully indexed 100% spousal annuity paying more than the 'swr' then unless you are worried about inheritance it sounds like a no brainer.  Last time I looked annuity rates were in the 2.x% range.

AFAIK, fully inflation linked annuities are not that popular, as they are expensive. So it could be the report is looking at ones with a cap, which of course brings the price down.

enthusiasticsaver

We probably come under the comfortable category on that PLSA receiving £48000 per year net from various sources  as a couple.  We don't divide our income the way they suggest though.  

Over the year we spend the following:

£8000 on bills and direct debits for some essential and non essential outgoings. No mortgage. 
£6000 on food and eating out/entertainment
£4000 on running two cars and fuel 
£3000 on gifts to family 
£6000 on holidays and short breaks in UK/Europe. 
£7200 split between us on personal expenditure (clothes, hobbies, etc) 
£1800 on running the house and white good replacement
£12000 saved for capital expenditure like replacement cars and more costly house repairs/improvements or long haul holidays

We could easily save on those costs though by around £25000 but can afford to spend and so we do.  

eastcorkram

@Albermarle

Do you know, roughly, what it would cost to buy an annuity which would pay £185 per week, linked to inflation? 

I've tried using annuity calculators, but they always want to start from the other way round, and also always seem to mention a lump sum, which is not what I'd like to know.

Albermarle

eastcorkram said:

@Albermarle

Do you know, roughly, what it would cost to buy an annuity which would pay £185 per week, linked to inflation? 

I've tried using annuity calculators, but they always want to start from the other way round, and also always seem to mention a lump sum, which is not what I'd like to know.

Nearly all annuities are bought from pension pots. The 25% tax free lump sum is paid to you from the pot and the 75% is used to buy an annuity. You could in theory use 100% to buy the annuity and give up the tax free part but that would rather unusual. You can also buy an annuity with non pension cash, but that is also unusual and more expensive.

The cost of buying an annuity, depends on is it for life or a fixed term - depends on if there is a provision for spouse payment- depends if it is 'level' with no inflation increases, or linked to full inflation, or has a cap, or automatically goes up by a fixed % each year- depends on any guarantees to get some of your money back if you die - depends on what age you take it out etc etc

If you were 65 and it was a lifetime annuity, going up every year by 3%, with 50% spouse payment, then £185 a week, would cost about £200K . So the pension pot would normally have to be over £250K 

eastcorkram

Thanks for that. Odd that you say it's unusual to not take the lump sum. There's so many posts on here when people say it's better not to take it unless there's a pressing need for it. Though maybe that's more important with DB schemes.