Help with knowing how much is 'needed' to retire?

QrizB

barnstar2077 said:

I am assuming I will live to an average age for a male, so about 81 years of age.

Don't forget that 81 is average life expectancy at birth.

By the time you get to 65, you've avoided dying for 65 years and your average life expectancy is now 86-ish.

Cobbler_tone

Thinking the state pension will be scrapped must be the ultimate doomongery. I’d be hiding any rope and sharp implements, whilst chalking off the calendar before the next market crash and guaranteed poverty. Some people just like to worry….don’t let life pass you by, you only get one.

barnstar2077

QrizB said:

barnstar2077 said:

I am assuming I will live to an average age for a male, so about 81 years of age.

Don't forget that 81 is average life expectancy at birth.

By the time you get to 65, you've avoided dying for 65 years and your average life expectancy is now 86-ish.

A quick Google says 83.5 years for a male once they have reached 65.  Seems a reasonable assumption.  With a bit of luck I will have been retired for almost 30 years by that point and working will be a distant memory! :  ) 

Storcko14

I'm forever told by people older than me - "there wont be a state pension when you retire". 
Again, crystal ballery there. Maybe there wont be but I'd imagine there'd be something. Unless somewhere down the line it gets totally replaced with the workplace pension.

If you are able to, maybe you could calculate your savings rate assuming no state pension and then likely retire several years early.  

B0bbyEwing

Ok let's address this what I've been told by older folk since it's sort of taken over the last few posts.

In my own reply to this I pretty much said I wasn't on board with it as in I don't buy in to it as in I'm not letting it worry me. It's just what (many) people have said to me over the years.

Which is why I see it as a bonus because it's not something I personally have put in. I rely on my own money and the state pension will be a bonus top up.

I said "maybe there wont be" simply because not many things in life are 100% certain. While it's unlikely it'll be scrapped, it's not impossible.

Which is why I said I believe there'd always be something in place.

So yeah, I'm not panicking about it not being there come my time.

barnstar2077 said:

I am assuming I will live to an average age for a male, so about 81 years of age.

My plan is to have two pots at retirement.  A maintenance fund, which will only be used for new boilers, washing machines etc (and should replenish itself from growth.)  The second pot will be used for drawdown to live on.

This way, if I run out of my private pension money I will still have the state pension and my maintenance fund, so I will never have to worry.

If you try and plan for every eventuality you will end up worrying and working far longer than you needed to.

I would recommend you put in more than the minimum into your works pensions, so for example, if you put in five and they match it, then put in an extra five, for a total of 15%, and then reassess how things are going every few years.

It is just as important that you pay attention to how your pensions/ISAs are invested, as this will have a massive affect on your returns.  Do you have access to your pension and ISAs online to be able to see which funds are available?

If you would like the possibility of retiring before you can access your pensions then a stocks and shares ISA may also be worth considering,

I don't contribute above & beyond in my workplace pension because neither do they. They pay in the minimum & will only pay in the minimum (& wouldn't do that if they didn't have to).

My 'above & beyond' goes in to my SIPP which I run through Fidelity.

I have a Lifetime ISA with AJ Bell.

While I hope to retire before state pension age, I don't believe it'll be massively before.

OldScientist

barnstar2077 said:

QrizB said:

barnstar2077 said:

I am assuming I will live to an average age for a male, so about 81 years of age.

Don't forget that 81 is average life expectancy at birth.

By the time you get to 65, you've avoided dying for 65 years and your average life expectancy is now 86-ish.

A quick Google says 83.5 years for a male once they have reached 65.  Seems a reasonable assumption.  With a bit of luck I will have been retired for almost 30 years by that point and working will be a distant memory! :  ) 

The tiny difference in results is because 83.5 is the period life expectancy while 85 yo is the cohort life expectancy (see https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/methodologies/periodandcohortlifeexpectancyexplained ). In other words, future improvements in medicine etc. is projected to add about 1.5 years to life expectancy to those currently 65yo.

I've always found the ONS calculator at https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07 (updated Feb 2025) to be useful.

I also note that while a single retiree has a (roughly) 50% dying before 85yo (or 83.5) and a 50% chance of living beyond that age, the probability of one or both members of a couple living beyond that age is roughly 75% (for a M/F couple the probability is slightly higher). While each to their own, planning to either the 25% level (92 years old) or 10% level (96yo) will increase the probability of not having to rely on solely the state pension late in life and provide a larger legacy. FWIW, I've used 100yo as a planning horizon.

Nurse2047

This helped me 
https://youtu.be/AHYo_wCkl5g?si=CzkLcDu20DUNrlbP

Exodi

B0bbyEwing said:

Ok let's address this what I've been told by older folk since it's sort of taken over the last few posts.

In my own reply to this I pretty much said I wasn't on board with it as in I don't buy in to it as in I'm not letting it worry me. It's just what (many) people have said to me over the years.

Which is why I see it as a bonus because it's not something I personally have put in. I rely on my own money and the state pension will be a bonus top up.

I said "maybe there wont be" simply because not many things in life are 100% certain. While it's unlikely it'll be scrapped, it's not impossible.

Which is why I said I believe there'd always be something in place.

So yeah, I'm not panicking about it not being there come my time.

I understand you say this in response to comments in the thread suggesting changes to the state pension are nonsensical, but I would like to point out that this forum heavily skews older - there are more retired posters than those working full time.

I mention this because this forum often has a predictable stance on particular issues.

The fear about the future of the state pension isn't just 'doom-mongers' as has been characterised, it's a significant amount of the population:

IFS said:

4    Despite its new-found simplicity, there is a mixture of confusion and pessimism about the state pension. Although the state pension has increased at least as fast as inflation every year since 1975, 38% of people think that in the next 10 years it will not keep up with inflation. Pessimism is also widespread; a third of people do not think the state pension will exist in 30 years’ time. 

https://ifs.org.uk/publications/future-state-pension

I personally disagree, I think it will still exist, but not the same as it does today.

Albermarle said:

Maybe you could reply to these people as follows;

Look at the massive fuss made when the Winter Fuel allowance was withdrawn ( worth only £100 for many pensioners) and the Govt was forced into a humiliating U turn.

The state pension is a much more politically sensitive issue than the fuel allowance !

Older people vote in much larger numbers than younger people.

So what do you think would happen to any political party that withdrew the state pension?

They would be obliterated at the next election, and probably for ever.

So its not going to happen is it ?

This feels like a misrepresentation of the points commonly made.

I'm not sure anyone is suggesting any government would ever take the state pension from pensioners currently in receipt of it or soon to be. As you point out, that would be absurd, retirees would be out in force with their pitchforks, and rightfully so.

But you said it yourself, older people vote in much larger numbers than young people, hence why the governments de facto preferred method has been increasing SPA.

Who's to say a government faced with a decision of ending the triple lock (and facing pandemonium from retirees) or maintaining the triple lock for current retirees while tinkering with eligibility on younger people (e.g. increasing age beyond life expectancy, means testing, reducing it while increasing mandatory employer contributions, etc) wouldn't decide the latter is less politically damaging?

The triple lock can not last forever. Though it's clear every political party is reluctant to solve it.

phlebas192 said:
The absolute worst case scenario for those not in receipt of the SP is that increases will fall behind inflation and reduce the SP's worth in real terms. In the meantime, every increase in the SP benefits future payees more than it benefits current pensioners. This should be obvious since those yet to receive it will do so for longer on average than existing pensioners. Increases in starting age could offset this but so far all such increases have been in line with life expectancy so are neutral.

This is some real crystal ball stuff here.

How could you possibly know that triple lock increases will benefit future beneficiaries more? Who's to say that ending the triple lock sooner than later might prevent the government from being forced to take all sorts of other damaging methods on future retirees?

Let's also not consider the demographic pyramid (this is a problem the world faces due to declining birth rates) where there will be less workers per retiree than currently.

There's also an obvious conflict of interest for retirees to suggest that current workers should keep the triple lock party going.

Cobbler_tone said:

Thinking the state pension will be scrapped must be the ultimate doomongery. I’d be hiding any rope and sharp implements, whilst chalking off the calendar before the next market crash and guaranteed poverty. Some people just like to worry….don’t let life pass you by, you only get one.

Quite the opposite - I exclude the state pension from my retirement planning.

Not because I think the government would ever scrap it, but because it's better to plan for the worse and hope for the best. I also don't need to spend the next few decades worrying about the whims of the current government and the ever-ballooning state pension bill.

Naturally I suspect this won't be a popular comment!

phlebas192

Exodi said:

The fear about the future of the state pension isn't just 'doom-mongers' as has been characterised, it's a significant amount of the population:

The doom mongers are the people who write / say nonsense in the press or elsewhere for clicks or to manipulate voters. 

Exodi said:

phlebas192 said:
The absolute worst case scenario for those not in receipt of the SP is that increases will fall behind inflation and reduce the SP's worth in real terms. In the meantime, every increase in the SP benefits future payees more than it benefits current pensioners. This should be obvious since those yet to receive it will do so for longer on average than existing pensioners. Increases in starting age could offset this but so far all such increases have been in line with life expectancy so are neutral.

This is some real crystal ball stuff here.

How could you possibly know that triple lock increases will benefit future beneficiaries more? Who's to say that ending the triple lock sooner than later might prevent the government from being forced to take all sorts of other damaging methods on future retirees?

Wherever we end up in the future the starting point is "now". If pensions increase by inflation, less than inflation or are even cut in the future, the larger they are at the start of the process the larger they will be after the change. 

B0bbyEwing

My wild uneducated guess is that there'll be something. 

That something may be a heavily reduced state pension where my workplace pension makes up what'd be the difference. 

It may be I'll get the state pension.... When I'm 80.

It may be that if my private/workplace pension is worth £XYZ and I have £abc in savings then I'll only get a state pension of £whatever whereas if I did less in retirement planning I'd get more state pension. 

They're all 'something' possibilities. 

Do I think it'll be the amount that it'd be if I retired today? My wild guess is no. But I'm not planning on relying on it either. As I said - bonus. As soon as you rely on others then you're at their mercy so I try and sort myself.