How much pension income to break even

theoretica

While it is certainly easier to get many additional benefits if you are on pension credit, several - eg housing benefit, council tax reduction - also may be available to pensioners with low incomes though above the pension credit threshold. 

Also, many pensions nowadays do not provide a fixed income. So you don't always need to calculate for pension savings lasting the entire retirement. Couldn't someone with pension savings, but state pension below the pension credit threshold, enjoy their savings giving a somewhat higher quality of life for the first part of their retirement, or ability to retire a bit before state pension age, until the savings run down and then become eligible for pension credit? 

dont_use_vistaprint

Interesting replies.

Point of this post was to understand the benefits or lack of for certain numbers of people who have been unable for various reasons to pay into  pensions & now feeling pressured that they should start often in their 40s and 50s and still on low wages with huge financial pressure. I happen to know if a few people like this and I’m sure there are many, many more.

The reality is clear - they will be putting away money that they could better use now , not getting full tax relief , often pitiful amounts matched from the employer, and seeing absolutely no benefit from it later, but no one is telling them that.

realistically, unless they can manage to get a pot of about 250K to 300K, which is going to be impossible, they would be better off saving nothing in a pension as it’s classed as income later, as it’s clear that once you are eligible for pension credit, there is a whole raft of other help available that is not technically means tested, Is simply paid to people in receipt of pension credit.

Better put that money into ISA savings ?

dont_use_vistaprint

dunstonh said:

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?

Whether or not you believe it or understand it is irrelevant as it is true. The only savings this person has is what she saves from her pension and pension credit. 

I’ve no idea what your expectations or experience of holidays abroad are but I’ve visited over 150 countries and many of my holidays are actually cheaper than staying in the UK particularly places like Vietnam in winter. I’m just pricing up a Air China flight for next November at £488 from London to Ho Chi Min City &  accommodation in a lovely homestay including breakfast for 6 weeks at £4 per night 

dont_use_vistaprint

DairyQueen said:

My elderly aunt (aged 88) recently moved into a new retirement complex (part social housing and part privately owned). This a 'close care' development with 24/7 care on site. Auntie has no personal pension and no savings. She never worked outside of her late husband's business, and uncle didn't pay self-employed NI.

Auntie's lack of means entitles her to pension credit. This key unlocks a host of other benefits. She also receives attendance allowance. She pays nothing in rent, service charge, council tax, water or cleaning. Her only regular bills are energy, food and a contribution toward her carer. She receives free dental, optician and hearing aids and the winter fuel allowance.

Auntie tells me that she has "never had so much money". If I had to put a figure on the financial support auntie receives I suspect it would be in the ballpark of £25,000p.a.  

I think she has earned it. 

Auntie was my grandmother's sole carer for seven years until Granny's death (three years as a dementia sufferer). Auntie also took on the care of her husband for several years until his death. She has saved the taxpayer a small fortune in community carers and nursing home fees. She deserves every penny of the support that she now receives. 

I agree she absolutely deserves that. I think all old vulnerable people deserve looking after by the state.

The only sad thing this story highlights to me is that she hasn’t earned this by caring and looking after people for all those years she’s earned it simply by not saving anything for her retirement and own care.

sgx2000

Perhaps the foreign holidays are 6 single days in Rhyl..........

dont_use_vistaprint

sgx2000 said:

Perhaps the foreign holidays are 6 single days in Rhyl..........

Interesting so many people focused on the least interesting & relevant aspect of this story, the foreign holidays.

You can read much between the lines 

Silvertabby

dont_use_vistaprint said:

Interesting replies.

Point of this post was to understand the benefits or lack of for certain numbers of people who have been unable for various reasons to pay into  pensions & now feeling pressured that they should start often in their 40s and 50s and still on low wages with huge financial pressure. I happen to know if a few people like this and I’m sure there are many, many more.

The reality is clear - they will be putting away money that they could better use now , not getting full tax relief , often pitiful amounts matched from the employer, and seeing absolutely no benefit from it later, but no one is telling them that.

realistically, unless they can manage to get a pot of about 250K to 300K, which is going to be impossible, they would be better off saving nothing in a pension as it’s classed as income later, as it’s clear that once you are eligible for pension credit, there is a whole raft of other help available that is not technically means tested, Is simply paid to people in receipt of pension credit.

Better put that money into ISA savings ?

But these people, in their 40s and 50s now, will almost certainly receive the full single tier pension (nSP) and so won't qualify for pension credit or any of the other tasty means tested benefits being in receipt of PC opens the door to.

barnstar2077

I know dozens of people who are highly likely to be on pension credit in old age.  They are struggling now, working their fingers to the bone on minimum wage for bosses and companies that treat them like dogs.  Meanwhile their rent is a grand a month and food prices feel like they have gone up fifty percent since covid.

I hope they get millions in retirement, because they have suffered their whole lives, being treated like scum by companies and landlords alike.  Not everyone on pension credit is there because they didn't try.  Many will be there because once you get trapped renting with little education and low self esteem (from being trodden on your whole working life) it is pretty hard to get out of it. 

dont_use_vistaprint

theoretica said:

While it is certainly easier to get many additional benefits if you are on pension credit, several - eg housing benefit, council tax reduction - also may be available to pensioners with low incomes though above the pension credit threshold. 

Also, many pensions nowadays do not provide a fixed income. So you don't always need to calculate for pension savings lasting the entire retirement. Couldn't someone with pension savings, but state pension below the pension credit threshold, enjoy their savings giving a somewhat higher quality of life for the first part of their retirement, or ability to retire a bit before state pension age, until the savings run down and then become eligible for pension credit? 

Yeah that’s  possible and allowed as long as you don’t purposely dispose of significant savings just  to claim benefits. There are rules that are reasonable - replacing a car, holidays, home repairs etc.

dont_use_vistaprint

barnstar2077 said:

I know dozens of people who are highly likely to be on pension credit in old age.  They are struggling now, working their fingers to the bone on minimum wage for bosses and companies that treat them like dogs.  Meanwhile their rent is a grand a month and food prices feel like they have gone up fifty percent since covid.  I hope they get millions in retirement, because they have suffered their whole lives, being treated like scum by companies and landlords alike.  Not everyone on pension credit is there because they didn't try.  Many will be there because once you get trapped renting with little education and low self esteem (from being trodden on your whole working life) it is pretty hard to get out of it. 

This is true. If I was still there certainly wouldn’t bother paying into a pension to subsidise pension age benefits.

It takes decades of sacrifice, wise financial decisions and hard work  to get out of that, and sometimes luck and good friends to help !  and not many do get out