"Living with dignity" in retirement

[spikey]

The Grauniad reports that according to a study by the Pensions and Lifetime Savings Association, a retired couple now need at least £19,000 a year to live "with dignity", assuming that the house in which they live is paid for.  A single retired person apparently needs £12,800.  Should retired persons wish to live a "moderate" lifestyle, the figures are £34,000 and £23,300 respectively.

 

Interested to know others' thoughts on this ...

[33C]

This is the sort of thing that should be taught in secondary schools at 13 upwards. Never mind WW1 and Henry 8th, (although other periods in history are available), sort out your finances and teach them the value of a pound. In fact,  a good project would be, "Here's a fiver, the child who has turned it into the greatest amount in the bank at final exam time, not only gets an A☆ but gets to keep it all! Those who play the game wisely and well, will have the cash to pay for university......

[J. S. Bach]

I guess that I am "living with dignity" in retirement with the equivalent of £24350* that is from a pension and Social Security. Unfortunately the house is not paid for  but I can still afford a few Deltics as another NMer would say.

 

*using today's rate of $1.27365 = £1

[C126]

This could not be more timely for me, as my retired Beloved has had enough of being woken by the alarm-clock so I can go to work, and 'suggested' I investigate early retirement and drawing down pensions.  Forecasts received so far say I would have about £8K per year to live on, which just pays my share of the essential bills.  But to be honest, I am not sure what to allow for these 'essential bills' annually.  Look forward to reading others' thoughts as well.  Thanks.

[BR traction instructor]

With 7 years of happy retirement under my belt so far, I can only say that sitting down and working out your annual income/funding streams (workplace/dependents pension or savings) up to the point where the old age pension adds to whatever got you that far and cutting your cloth accordingly, has been my recipe. The girlfriend still works and we go halves on all running costs, share a car and spend a lot of time walking the fells etc. I spent the first 5+ years of retirement cruising the inland waterway network on a narrowboat...a very economical way of living.

 

£15,000 per annum has been my magic figure throughout and it is still working fine.

 

BeRTIe

Edited June 28, 2023 by BR traction instructor

[Nearholmer]

I’d say that the Guardian isn’t far wrong, and where that all gets very interesting isn’t only for people thinking of retiring, it’s when you consider the proportion of the population who are living on those sorts of incomes in mid-life, while paying out significant housing costs and bringing up children.

 

My mother is operating at about the “dignity” level as a single person, sort of “very frugal, but OK’, and the descriptors in the article are exactly right “no car, one modest short holiday in the UK each year, etc.”.

 

The bit I’m unsure about is why they think the cost for a couple is so much higher in percentage terms. Clearly it is higher, but are the proportions right?

Edited June 28, 2023 by Nearholmer

[C126]

Sorry, @spikey , but is it an article on to-day's web-site, or this one: https://www.theguardian.com/money/2023/apr/15/uk-pensions-how-much-retire-cost-of-living-inflation-income

 

by Patrick Collinson, 15th April?  Thanks.

[eastglosmog]

Figures seem about right until you start needing carers or to go and live in a home, when £50,000+ will be needed.

[spikey]

1 hour ago, C126 said:

Sorry, @spikey , but is it an article on to-day's web-site, or this one: https://www.theguardian.com/money/2023/apr/15/uk-pensions-how-much-retire-cost-of-living-inflation-income

 

by Patrick Collinson, 15th April?  Thanks.

 

'tis the latter.

[33C]

22 minutes ago, eastglosmog said:

Figures seem about right until you start needing carers or to go and live in a home, when £50,000+ will be needed.

If you want a good home....

[Hroth]

8 minutes ago, eastglosmog said:

Figures seem about right until you start needing carers or to go and live in a home, when £50,000+ will be needed.

 

Once you have to go into a home, then you can wave goodbye to "living with dignity". 

 

My father went into hospital with a chest infection and when he came out he was unable to walk and went into a home that was supposed to provide physical rehabilitation. If the place had been a dogs home, the RSPCA would have shut the place down and had the owners up in court. The place was understaffed and the residents were badly neglected. 

 

Luckily our local council were still able to put together a care package that supplied a specialised bed, hoist, wheelchair and carers 4 times a day to enable him to return to his own home and live in dignity.  Obviously we had to make a substantial contribution to his care, but it was still cheaper and more dignified than being shipped off to a "home".

 

He passed away peacefully in his own home at 99, only a few months off his 100th birthday, "luckily" the year before Covid struck.  If he had been stuck in the "home", he probably wouldn't have lasted the year out.

 

[33C]

Cheaper to move into a hotel or cruise liner! Prices care homes charge per week...

[MyRule1]

27 minutes ago, Hroth said:

Once you have to go into a home, then you can wave goodbye to "living with dignity". 

Not always true when my mother could no longer cope at home we found a home locally that was run by a not for profit organisation and I could not fault the care she got. She died before COVID but I understand that the number of deaths in that home due to COVID were lower than others.

 

As to the OP's question she was self funding so it did hit my brother and my longer term retirement income but we were happy about this. We are now waiting on the government to acknowledge her widow's pension underpayment.

 

[Dava]

Since the personal tax allowance is £12,570 for 2023/24, minimising tax paid above that is a consideration. Running a modest part-time business from home means some costs can be claimed against tax, for example. Just a thought.

 

I don’t fancy retiring at the moment with costs rising everywhere and paying tax on half my income.

 

Dava

[Andy Hayter]

35 minutes ago, Dava said:

Since the personal tax allowance is £12,570 for 2023/24, minimising tax paid above that is a consideration. Running a modest part-time business from home means some costs can be claimed against tax, for example. Just a thought.

 

I don’t fancy retiring at the moment with costs rising everywhere and paying tax on half my income.

 

Dava

 

I think that  a very odd way to look at things.

 

So is it better to earn £12,500 and pay no tax - laving you with £12,500

Or

earn £13,000 and pay around £100 tax - leaving you with £12,900?

 

 

[AndrueC]

4 hours ago, spikey said:

The Grauniad reports that according to a study by the Pensions and Lifetime Savings Association, a retired couple now need at least £19,000 a year to live "with dignity", assuming that the house in which they live is paid for.  A single retired person apparently needs £12,800.  Should retired persons wish to live a "moderate" lifestyle, the figures are £34,000 and £23,300 respectively.

 

Interested to know others' thoughts on this ...

Given that I've been working with my IFA to plan for a possible retirement next march (at age 57) it's heartening to know that my £24k is a good target. He reckons I could aim higher if I needed to so perhaps it's time I stopped dithering and just pulled the 'shute cord :)

 

On the other hand my biggest concern is a poor social life. I play golf but that's about all I do. From everything I've read living a solitary existence is not healthy and boredom is a concern especially during the shorter days and poor weather of winter.

Edited June 28, 2023 by AndrueC

[Southernman46]

🤞 I get there intact.

🤞 The money will be enough.

[spikey]

Well I'd love to know where The Lady wife and I have gone wrong.  12 years now since we had to pack up working, and we're quite happy on a total combined income of £12,800 - exactly the same as this study reckons is the bare minimum for a single person to "live with dignity" ...

[Andy Hayter]

46 minutes ago, AndrueC said:

Given that I've been working with my IFA to plan for a possible retirement next march (at age 57) it's heartening to know that my £24k is a good target. He reckons I could aim higher if I needed to so perhaps it's time I stopped dithering and just pulled the 'shute cord :)

 

On the other hand my biggest concern is a poor social life. I play golf but that's about all I do. From everything I've read living a solitary existence is not healthy and boredom is a concern especially during the shorter days and poor weather of winter.

 

Just a slight word of caution about hitting todays "target" and thinking it will be OK.

 

Inflation is not your friend.

If this had been the figure back in say March 2022, with 10% inflation between then and March 2023, you would now b needing £26,400 to stay still - and that is a simplification because food inflation is higher than that.  Older people with moderate incomes will be spending relatively more on food.    It is complex and everyone's position will be a little different.

 

AS to the validity of the numbers, living in France means that my costs and situation are quite different to the UK; but they don't sound a million miles off what many would need today.

[DCB]

The problem with retirement is the lottery of the bid value of private pensions and the complete dis connect between how many years you pay in for and the final pay out.
My father in law deferred retirement from his original 60 years to 65 to grow his pension pot. The extra 5 years netted him less pension per week than he was offered at 60,
I had a struggle myself with the pension provider trying to back track on their offer, however it was in writing and they had to pay up, they were not happy and tried hard to get me to take a lump sum not an annuity.  The National Pension Ponzy Scheme is the best deal out there, feed it with as much extra payments as you can if you are well above benefits level as its fantastic paying out far more than you paid in if you make it past about 80, but again its gambling.  Then again care homes are around 1500 pw, £80K pa so cash will soo run out if you or her indoors has to go in.    It's all a lottery and the only winners are the fund managers.

[Dava]

1 hour ago, Andy Hayter said:

 

I think that  a very odd way to look at things.

 

So is it better to earn £12,500 and pay no tax - laving you with £12,500

Or

earn £13,000 and pay around £100 tax - leaving you with £12,900?

 

 

If I carry on working till 66 then every year adds to pensionable years & then the state pension kicks in, so it’s better all round.

 

Dava

[Bernard Lamb]

An interesting thread with some quite divergent views.

Quite by accident I worked in the private sector while SWMBO worked for the NHS. That way between us the swings and roundabouts of life saw us coming to retirement age in a reasonable financial situation. The house is paid for and we have some savings. I reckon the utilities come to around £6500 at present. Going by the quoted figures I would agree that we could live with dignity on that amount. With inflation estimated to be still at 7% when next years increase is set, then SWMBO will get a much larger increase than I will. Another year of similar inflation and I can see real problems for many. 

We take in a few airbnb clients as we have a spare room and bathroom. If pushed for cash we could expand on the numbers. The government allow an income of £7k per annum tax free if you have room and need cash. Worthwhile doing, particular;y so if you have a local industry that employs temporary workers. In our case local film studios and people going on courses at the ski centre. 

Bernard

[Portchullin Tatty]

There are a number of versions of similar reports floating around; the most insightful one I have found is by Which and shows you how the different amounts being quoted are arrived at.  You can plug your personal circumstances into this and see how you feel you might live in retirment:

 

https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

 

Updated today, so it is bang up to date.

 

The expectations as to what people feel to be an acceptable living standard in retirement are rising even faster than the cost of the latest toy trains!  This does mean that you might well feel the need for more money when you get to retirement than those already there.

 

Any significant problems for me and I have a large collection of D&S kits to sell, they ought to buy another year or two of happy living!

[AyJay]

Two months ago, on the Monday I handed in my laptop and pass, shredded my notebook, then took my two managers out to a coffee shop.

On the Tuesday morning, very early, I went out for a walk to the local park and exclaimed "Now what!!!"

In one step, I went from a professional Engineer to an amateur decorator.

 

I no longer have to get up very early, although I do. Neither do I burn an obscene quantity of fuel while losing up to 3 hours a day in commuting.  I am completely flexible with how I spend my day.

 

But...

The sense of purpose that has driven me all my adult life, is now gone.

I miss the interaction that I used to enjoy with my peers.

I cannot get away from the constant menu of daytime TV "Today we are with X and Y as they search for a property in popular Marbeya  and I'm using all of my skills....."  😒   

 

 I do secretly miss my working life.  I have contacted Pendon and shall be volunteering there, just as soon as the decorating is finished.

As for the money aspect, yes it probably would be cheaper to spend my end times on back-to-back cruises. Perhaps P&O and Carnival are missing a marketing opportunity.

[Southernman46]

As well as potential income issues, it's also likely I'm going to have to admit that layout will never get built and can no longer fob the missus off and have to unload some of that rolling stock 🙄