Understanding my state pension (quick question)

Dazed_and_confused wrote: »

It isn't for most people currently in retirement.

It will be for some people retiring now but not most. As years go by more and more will get £164.35 (or updated equivalent).

Are you earning enough to get a qualifying year for State Pension purposes? And expect to do so until you reach the £164.35 figure (or updated equivalent)?

You cannot get State Pension monthly, it's weekly or 4 weekly (and possibly fortnightly?)

Thanks for the reply.

Ok, that's cool to know. £164.35 per week for people entering pension age recently.

It seems you don't need to earn that much to get a qualifying year for state pensions. One of the years I only paid £192.42 in National Insurance, but it was enough to qualify me. Yes I am qualifying. I looked at my history and have 13 qualifying years and I have plenty of time to make up the 35 needed. I do have the option to top up a couple of years which would cost me £400 for each one. I don't think it's worth it as I should easily fulfil the 35 years needed for the full state pension. £400 per year seems expensive based on the fact I only needed to pay £192.42 for one of the 13 years I have qualified for.

Have I understood how the adjustment for inflation works with the compounded total?

lisyloo wrote: »

My advice is don't worry about state pension (not if you are planning a comfortable retirement).


Firstly the rules are likely to change. We can only plan on what we know so we have to make assumption about income tax, NI, tax free lump sum etc. but over 30 years there is a high chance they will change.


Secondly if you are planning a comfortable/early retirement then it will pale into insignificance. I am planning to retire at 55 but my state pension age is 67, so I have to manage 12 years with NONE. Your state pension age will likely be 68+ and may end up being 70+, that's another rason you need to plan without it if you don't want to work until 70.

The state pension is just one aspect I am looking at. I just want to know that I have understood the inflation increase correctly and then I can estimate how much I will need on top of this pension to survive. We can only estimate and be sensible with our money and hope we have enough to survive when we reach old age.

I will likely inherit a large some of money at some point in older age. I will likely buy a property soon and that will increase in price over time - then I will be able to downsize and free up capital. I also plan to put savings away and invest in stocks. Wages should rise over time. I think I estimate I will be ok, there is always the option to adjust as I go.

Silvertabby wrote: »

Don't add inflation to the State pension - unless you are also adding inflation to your expected outgoings.


In theory, what £164 per week will buy you today will be what £164 plus inflation will buy you when you retire. So, what you need to consider is that if you retired today could you live on £164 per week - and if the answer is no, then you need to take steps to secure the difference between £164 and what you expect you will need.

Yep, this is how I am looking at it. I'm just checking I understand how it works and that I will be getting a significant increase in pension amount compared to today, as obviously things in 34 years time will be more expensive.....

I am expecting to be mortgage free by retirement age. So lets say I had retired today, mortgage free. If I was to receive £164.35 a week, which is £715.63 a month, then that would be plenty right now. I calculated that my outgoings would be around £800 per month if I was to take out a mortgage now. Without the mortgage that would reduce to £400 - £500 per month in outgoings, so yes - £715.63 seems like enough pension to get by, especially as I should inherit a decent sum of money, will also save and invest, wages will increase, and as I plan to buy a house I will also have the opportunity to move to a cheaper property to free up capital, if needs be.

I am not someone who lives pay check to pay check, buys brand new cars, etc etc..... so I am sensible with money too.

I don't think I need to worry about a private pension then.

But feel free to disagree with anything I have said above, any advice is welcome.