How much pension income to break even

Silvertabby

One of the long term aims of the new single tier pension is to remove the need for pension credit etc by setting the nSP at a rate just over the means test limit.

It will be some years before we are fully out of the transitional period, but certainly those currently under 50 should be paying into some form of pension to take them out of the 'just surviving' zone in retirement. 

zagfles

DullGreyGuy said:

It would be easier if you add up the annual value of what you think these things are worth to you... 

Free boiler is only for those with a non-condensing boiler, ours therefore wouldn't be applicable and its a once in a lifetime thing

Taxi to GP... walk, wouldn't use a taxi

Optical voucher - my glasses were £25, they last about 10 years typically. So £2.50 per year. 


Agree with others, you cannot afford 6 foreign holidays a year on £11,502.40. Maybe she isn't the one paying for the holidays? Or have generous gifts from her kids etc? My gran used to go on 3-4 foreign holidays a year but that was her kids taking her (normally in exchange for baby sitting services) and not a penny was coming out her own pocket for them. 

Depends on the holidays. I've just been on a short trip to Eastern Europe, flights were £35 return, hotel was £30 a night but there were much cheaper accommodation options available, I spent around £30 a day on everything else but could easily have done it for under half that without missing out on too much. 

I reckon I could have done it for a week's PC if I'd really wanted to and would still have a had a good time  I used to have at least a month abroad when on less real terms income than PC. 

And if for instance OP is staying with friends/relatives abroad then it's very easily done. 

zagfles

Keep_pedalling said:

Sounds like BS to me. PC is means tested and no one on it will have enough savings or income to have 5 to 6 overseas holidays a year.

It's means tested but quite generously as far as savings go, there's no reduction for the first £10k and the "tariff" is £1/week per £500 over that, so people with reasonable amounts of savings could still get PC. 

See Pension Credit: Overview - GOV.UK

MEM62

dont_use_vistaprint said:

She was telling me how with pension credit, council tax and water rates reductions, fuel allowance, free boiler, insulation, and various other benefits such as free dental, optical, tv licence  taxis for medical appointments - the list is fairly long as she’s constantly finding more things that are free or reduced but only if on pension credit. Shes very comfortable financially and able to save each month & gets to go on 4 -6 foreign holidays a year and still has spare cash.

Unlikely to say the least.  

dont_use_vistaprint

MEM62 said:

dont_use_vistaprint said:

She was telling me how with pension credit, council tax and water rates reductions, fuel allowance, free boiler, insulation, and various other benefits such as free dental, optical, tv licence  taxis for medical appointments - the list is fairly long as she’s constantly finding more things that are free or reduced but only if on pension credit. Shes very comfortable financially and able to save each month & gets to go on 4 -6 foreign holidays a year and still has spare cash.

Unlikely to say the least.  

Which part/s specifically ?

dunstonh

Realistically, what does 4-6 overseas holidays a year come to?

The guarantee credit is means tested and takes into account other income and savings over £10,000.
The savings credit element takes into account savings over £10,000  Then every £500 over that counts as £1 income in the means test.

Someone earning £11,300 state pension and has £30,000 in the bank and no other benefits received will not get pension credit.

So, going back to the cost of 4-6 overseas holidays a year, how realistic is it that doing what they are saying using only their own funds?

dont_use_vistaprint

SouthCoastBoy said:

Pension credit does open up a number of other benefits. My mum received pension credit, which in turn led onto additional benefits such as not having to contribute council tax, she also got a free boiler and I think some additional winter fuel payment (but not sure on that one). 

I think there may well be a position where if you receive just enough to not get pension credit you may be worse of? I think that is the point the OP is making. I don't know if this is true, but I do know by my mum receiving pension credit it opened up a number of other benefits.

Thank you, finally someone  who actually read and understands the original post!

I think the sum of all those additional benefits is quite significant, especially when you consider it is all tax-free free. 

Cobbler_tone

I think this is turning into the urban myth that some people are better off not working than working. Alongside all the 'immigrants' who drive around in new cars with new mobile phones provided by the state.

The one area I would question whether it is worth having £500k in the bank is when it comes down to care. 

Someone on pension credits isn't going to have savings (of note) and someone with a half decent pension on top will still get plenty of help. Free prescriptions, a bus pass and if they are struggling with their health a non-means tested attendance allowance. 

I am sure there are some though that have fleeced the benefits system from adulthood to the grave.

FIREDreamer

dont_use_vistaprint said:

SouthCoastBoy said:

Pension credit does open up a number of other benefits. My mum received pension credit, which in turn led onto additional benefits such as not having to contribute council tax, she also got a free boiler and I think some additional winter fuel payment (but not sure on that one). 

I think there may well be a position where if you receive just enough to not get pension credit you may be worse of? I think that is the point the OP is making. I don't know if this is true, but I do know by my mum receiving pension credit it opened up a number of other benefits.

Thank you, finally someone  who actually read and understands the original post!

I think the sum of all those additional benefits is quite significant, especially when you consider it is all tax-free free. 

Assuming the value of these freebies is £4,000 per annum and a tax rate of 15% allowing for PCLS (the state pension pretty much uses up any personal allowance) and applying the oft quoted 4% rule, the amount needed in a pension plan to cover the loss of these freebies is …

£4,000.00 / 0.85 * 25 = £117,647

However there’s no guarantee that these freebies will be available in the future.

SouthCoastBoy

dont_use_vistaprint said:

SouthCoastBoy said:

Pension credit does open up a number of other benefits. My mum received pension credit, which in turn led onto additional benefits such as not having to contribute council tax, she also got a free boiler and I think some additional winter fuel payment (but not sure on that one). 

I think there may well be a position where if you receive just enough to not get pension credit you may be worse of? I think that is the point the OP is making. I don't know if this is true, but I do know by my mum receiving pension credit it opened up a number of other benefits.

Thank you, finally someone  who actually read and understands the original post!

I think the sum of all those additional benefits is quite significant, especially when you consider it is all tax-free free. 

Yes, especially the council tax, which for a band d property around here is close to 2500 a year so 3k a year before tax