How much pension is needed?

Voyager2002 · 10 November 2018 at 4:09PM

So I have checked some pension projections, and seem to be on target for some index-linked pensions amounting to about 7,500 p.a., in addition to the full state pension. Is that enough for a home-owner (mortgage paid off), or should I be building up a private pension pot as well?

crv1963 · 10 November 2018 at 4:41PM

Voyager2002 wrote: »

So I have checked some pension projections, and seem to be on target for some index-linked pensions amounting to about 7,500 p.a., in addition to the full state pension. Is that enough for a home-owner (mortgage paid off), or should I be building up a private pension pot as well?

This may get more responses on the Pensions board?

It boils down to how much income do you need in retirement. What your plans are and lifestyle is. How we worked our "number" out was what we needed to fund daily expenses, holidays and running our cars plus some big purchases such as new cars periodically, big holidays periodically.

With SP you're on target for 16k pa before tax, so it may be that this is sufficient for you, however if you can save some more- then that will make for a more comfortable retirement, it depends on your needs/ attitude to risk and if you have a partner or not, how long before retirement, are you aiming for earlier retirement?

moneyistooshorttomention · 15 November 2018 at 10:35PM

Agreed - that there are all sorts of variables.

The first ones that come to mind:

- do you still need money for mortgage or rent (or are you safely a home-owner and mortgage-free)?

- are you single or in a couple? If you are single - then you will be the only one paying bills (estimate £2,000 pa extra for bills for a single person than someone sharing those bills with A.N.Other)

- are you "financially straight"? - ie you've done all the work you intend to do on your home/have got a reasonable amount of savings, etc, or no?

- are you/do you hope to be a grandparent? I notice various friends of mine that are grandparents are spending a noticeable amount on trips to see them and/or present for them etc.

- do you anticipate having to spend much money on healthcare (or, as I would call it, "subsidising the NHS":cool:).

- do you have relatives and/or good friends in other parts of the country/the world? If so - you will want money to visit them sometimes if possible

- how good are you with money generally?

They are all the first questions that come to my mind personally.

kangoora · 15 November 2018 at 11:39PM

Voyager2002 wrote: »

So I have checked some pension projections, and seem to be on target for some index-linked pensions amounting to about 7,500 p.a., in addition to the full state pension. Is that enough for a home-owner (mortgage paid off), or should I be building up a private pension pot as well?

Only you can work out how much you need. Look at 'The Number' thread on the pensions board - it does tend to end up buried sometimes. Some people on there wouldn't dream of retiring with less than £50k income, others say they will be quite happy with circa £16k - £18k.

As a (very rough) rule of thumb I think you should be aiming at between 50% to 66% of your working income unless you intend to cut back your spending greatly in retirement - which some people do.

How does £16k (£7.5k + £8.5k), roughly £1275 per month after tax. Does this sound like enough to be able to live on, pay all your bills, pay for holidays, car replacements, household repairs etc? If yes, then go for it - if no, then probably a good idea to get some extra savings built up.

Ilona · 16 November 2018 at 12:32PM

The amount you will need is something only you can decide on, depending on your present lifestyle, and your expectations of what retirement is about. If you want to carry on as you are and will need a similar income, then put some away while you are still working. If you are able to get by on less, then budget to manage on less.

I have led a pretty simple life, my expectations are quite low. As long as I have a roof over my head, food to eat, enough for utilities, run a car, have days away and holidays, and pay for my two cats, I am happy. I don't need any extra frills.

My pension pays me £10 k a year. Government, plus £20 a week private. I manage well on that and have money put aside for emergencies.

Horses for courses, cut your cloth accordingly, and live within your means. Remember the Old Style rules, if you can't afford it you don't have it. Save up for any large purchases.

ilona

pollypenny · 17 November 2018 at 9:53AM

You'll find that you can take advantage of offers and cheaper times at the cinema, restaurants and off peak holidays.

There's no need/excuse to buy smart work clothes anymore, which can be a saving.

However, having had to count the pennies all my life, living simply is the last thing I want to do. Travelling is a priority, both holidays and visiting our family, with gorgeous grandsons, in the USA.

ibizafan_2 · 17 November 2018 at 1:32PM

Same for me with two grandchildren in Australia, and shock horror, I now treat myself to business class out of my savings. Everyone has different priorities. For us, it’s travel as you don’t know what’s around the corner. However, we run two old cars, live in a small house and aren’t interested in “stuff”. Others would do the opposite. It’s a good thing we’re all different.

pollypenny · 18 November 2018 at 4:59PM

OH is a petrol head, unfortunately, spent his life working for one of the big ones in much of Europe.

We treated ourselves to business class once, when we were on duty in July. Not that much more than economy in that holiday period. But we go twice a year, so can't manage the luxury too often. Btw: only two classes in the plane so it was very good, as was the lounge at Philadelphia airport.

How much pension is needed?

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