I saw this article this morning, and being the number cruncher/budget gal I am, couldn’t resist a response
Can you really survive on the State Pension alone?
Things like this make me laugh, or at least smile, then when I think about it, a little angry.
I’m 62. I should have got my state pension two years ago, but TPTB moved the retirement age for my age group to 66. Those born after 1956 have to wait until they are 67, or 68, and the retirement age is gradually creeping up to 70, if not 75.
This to me is the Government plan anyway, as there is not enough money in the pot to pay pensions out, so they keep moving the goalposts so that they don’t have to. For years they have been putting the onus on the worker to save for their retirement, because quite frankly, I wouldn’t be surprised if they tried to SCRAP the state pension altogether.
I started work when I was 16, so until 51, paid in to the system through taxation and National Insurance as all workers do. A letter I received told me I had contributed for the necessary 35 years to warrant my getting a full state pension when I retired. This has now changed as the ‘starting age’ has been increased to 18, so I am two years short now, and will thus receive a reduced pension. I am fortunate that I have a Bank pension, and with two small annuities totalling £150 A YEAR (that was following the government’s recommendation I pay into a private pension scheme, and as they were both performing extremely poorly in the finance climate, I cashed them in as they both had a 25% tax free lump sum. They would be worth even less now), that is my total income for the year.
As things stand, I couldn’t possibly survive on this alone, so the addition of a state pension of £164 would be wonderful.
The Joseph Rowntree Foundation do a lot of monetary articles like this, and what makes me laugh is the extras, aka ‘non-essential expenses such as entertainment, new clothes, or holidays’ and ‘spends less than £20 per month at restaurants and has no luxuries such as pay TV or a dishwasher’.
All being well, a retiree would not have a mortgage to pay, but I know of many that have rent, and that is not cheap, so survival fails at the first hurdle.
Council tax takes a whopping £1300 a year from us. Heating and electricity is calculated at £60 pm, and is sufficient to cover our modest 2 bedroom bungalow. Water rates equate to £360 a year, even though we are on a meter and pretty conservative. House insurance is another £200 to £300, it costs us about £800 a year to keep our car on the road (including insurance) and we have an internet package which is another £360 a year.
Our food bill has increased though I am keeping to budget and at the end of the year for the two of us and the dog it will be around £1800. That’s £5680 out of the £8546 pension.
At first, I chuckled at the £20 per month at restaurants, then when I thought about it, if Hubby and I visit the coffee shop, that’s £7 a go, and we only have tea and cake, or we have the occasional Subway, so I guess they count. We have no TV at all, and I’ve never wanted a dishwasher. New clothes is on a need to buy basis, and holidays? With the dog it can be expensive, but we live by the sea now and there are places to go, so it’s not a bad life.
In my parents’ day, money was always tight. Dad died at 67, but Mum didn’t get her state pension until she was 73 because she was older than Dad and due to paying a reduced stamp when she was working (to save money), couldn’t get her pension until Dad got his at 65. They always cut their cloth to suit their purse, and for essential things like new school uniforms, there was The Provident Cheque. They managed, but had no spare cash for savings, holidays or trips down the pub. We lived in a council house (where I was born) until 1965, then moved to a house that Dad had built and he had a mortgage.
Today’s work force are earning at least ten times what they did, but the cost of living has spiralled out of control by greed of the utility companies, councils, and taxation through the back door, not just the income tax deducted from your wages. Many are enjoying their wealth (and why not), but please don’t bleat poverty at me when you say you can’t manage on £125K a year.
It is now compulsory for your employer to offer a pension scheme, and to me that is a good thing, provided your contributions are reasonable. If you are able to save, great, but there are no incentives for savers anymore with pathetic interest rates, and although you pay no tax on the interest in an ISA (to which you can add £20,000 a year now, she laughs hysterically), the rates there aren’t much better. There are Save to Buy ISAs, Lifetime ISAs, Regular Saving ISAs, all of which attract different rates depending on committment and access to funds. Mine is a basic Easy Access, and due to being a member of the society for almost 20 years, I get the loyalty rate of 1% on my savings. Wow.
So, my answer to the question is Yes, I could.
With my current pension and a State Pension of £164 a week, I could continue to live in my home on my own and not do too badly thank you very much.
But, that is only because throughout my working life I never had the money for luxury holidays, dining out with friends on a regular basis, a posh car, the latest mobile phone technology or entertainment systems, though I did save on a regular basis, even when I was only earning £750 a year (1972).
In truth, Hubby and I were too busy getting out of Negative Equity for the first 6 years of our marriage, and living frugally became the norm for us.
So when/if we get our State Pensions at 66, for the first time we will be ‘rolling in it’, and just watch the Taxman or some other bastard try and take a cut.