Money needed to retire

Billy Horner

Well-known member
If you can defer your state pension you get 1% increase for every 5 weeks- 10% a year. Best saving rate out there!

It's not a savings rate though. It's a gamble on how long you're likely to live for post-retirement.

Yes, you might get 10% more pension per annum, but you have to forgo 100% of your pension for a year to gain it. That means you would have to live for a minimum of 10 years post-retirement just to draw level with what you had to start with.

Admittedly, if you're convinced you're going to live until at least your mid-80s it might be worth considering, but it's certainly not a guaranteed moneyspinner.
 

Expat Smoggie

Well-known member
I get the impression that today's young uns will never get the chance to retire.
Even though Life expectancy has changed for the better the negative with it is that we all need a lot more cash to survive those extra years of living. Swings and roundabouts with a healthier lifestyle perhaps.
 

Blf

Well-known member
I retired from my full time job 8 yrs ago age 55. Did some part time work but eventually stopped all together.
I think the 2 figures they quote for a single person and a couple are low to manage on but that depends on the age they retire. If they are getting just their Occ Pen its low but the state pension on top of that then they should should be fine.
It's going to be harder for anyone renting their property as they will still have to pay their rent. Most owners will have paid of their mortgage prior to retiring I would think.
 

Billy Horner

Well-known member
It's not a savings rate though. It's a gamble on how long you're likely to live for post-retirement.

Yes, you might get 10% more pension per annum, but you have to forgo 100% of your pension for a year to gain it. That means you would have to live for a minimum of 10 years post-retirement just to draw level with what you had to start with.

Admittedly, if you're convinced you're going to live until at least your mid-80s it might be worth considering, but it's certainly not a guaranteed moneyspinner.

In fact, having had chance to think about this a little more, it's even worse than I suggested.

Average male life expectancy at age 67 is a further 18 years. To keep the maths simple, we'll assume that state pension at age 67 is £10k per annum and, if you defer it until age 68, it would be £11k per annum.

Therefore, an average male who retired at age 67 could expect to receive £10k p.a. for 18 years = £180,000.
An average male who retires at age 68 could expect to receive £11k p.a. for 17 years = £187,000.

That delivers an additional £7k in total, but you've had to wait 18 years to receive that amount. It works out at an annual 'interest' rate of 0.4%, so a long, long, long way off the misleading 10% more pension figure that was quoted.
 
Last edited:

weststandwally

Active member
In fact, having had chance to think about this a little more, it's even worse than I suggested.

Average male life expectancy at age 67 is a further 18 years. To keep the maths simple, we'll assume that state pension at age 67 is £10k per annum and, if you defer it until age 68, it would be £11k per annum.

Therefore, an average male who retired at age 67 could expect to receive £10k p.a. for 18 years = £180,000.
An average male who retires at age 68 could expect to receive £11k p.a. for 17 years = £187,000.

That delivers an additional £7k in total, but you've had to wait 18 years to receive that amount. It works out at an annual 'interest' rate of 0.4%, so a long, long, long way off the misleading 10% more pension figure that was quoted.
I get my state pension in January and due to retiring 4 years ago I have the option of buying additional years pension.For a one off payment of around £2600 I can get about £16 per week to make up for my shortfall in NI contributions,so if I live till I'm 70 I'll have got my money back and in profit.
 

RedAsABeetroot

Well-known member
It's interesting that the general consensus is that the figures quoted are low. I know not everyone on here are still local to Teesside, but it's relatively cheap to live here compared to say London.
 

zzzzz

Well-known member
It's interesting that the general consensus is that the figures quoted are low. I know not everyone on here are still local to Teesside, but it's relatively cheap to live here compared to say London.
If you own your own home by the time you factor in your council tax, insurances, energy bills and mobile/phone bills and even if you don't own a car there's not much left of £210 a week.
 

Erimus74

Well-known member
Woke up this morning & like a lot of early mornings this year my hands feel as if they're locked, this mornings the worst they've been, another reason for calling it a day next october, tablets & cider vinegar with honey in warm water each day
 

Laughing

Well-known member
Woke up this morning & like a lot of early mornings this year my hands feel as if they're locked, this mornings the worst they've been, another reason for calling it a day next october, tablets & cider vinegar with honey in warm water each day
I feel your pain erimus. I wanted to be a mechanic when I left school and I am grateful that my career went in a different direction.
 

Otto42

Well-known member
I'm not expecting to retire in the traditional sense. I have various pensions from my work over the past 30 years, some good from my time employed in the public sector.

However, since going freelance I have seen the benefit of doing what works best for you rather than trying to keep up with others and chase a dream.

My plans now revolve around working when I need to and not when I don't. I'll keep that going as long as I can. This works for me, because I try to take on work I enjoy which provides a good balance to my life.

So my advice would be work out what you want to do and then plan....if that's the traditional retirement model then you need to make sacrifices now, but that's not what everyone needs to aspire to!
 

Red_is_best

Active member
Yep contracted out of seeps but still have 35 years ni contributions so not affected.
I don’t think state pension works like that. The number of years qualifies you for the basic (starting) amount but I believe paying reduced NI ( that is, being contracted out) will reduce the maximum SP you can get.
 

zzzzz

Well-known member
I don’t think state pension works like that. The number of years qualifies you for the basic (starting) amount but I believe paying reduced NI ( that is, being contracted out) will reduce the maximum SP you can get.
I contracted out of SERPS but will still be entitled to the Max State Pension because of my NI record.
 

Erimus74

Well-known member
Erimus doing your job is there any way you could gradually ease into retirement by reducing your hours over time rather than having that cliff-edge moment?

I'm really starting to think about the prospect of doing 4 days a week for a couple of years then down to 3 days and so on.

It sounds great on paper but I don't know if it would be allowed or if indeed I could afford to do that 🤔
No Borofur, its working 12 hour shifts then, when you're ok with your finances, call it a day, sadly no reducing hours
 

Redwurzel

Well-known member
If you have been contracted out for say 20 years someone would have to work and pay NI for 55 years to get 35 years contracted in. I think its impossible as NI started at 15 and lasts till 65 for say soeone born in the mid 1950s. I assume they left school straight away, pay NI @ 15 and retired at 65 (or stopped paying NI) say in 2021 with no gaps. Thats only a 50 year NI paying life. To get full pension soeone relistically would have to be have contracted out for around 12 years or less. People become contracted out if they joined an occupational scheme or started a private pension (which everyone could do after 1988 and self employed at any time). So a lot people after 1988 were contracted out of serps. Serps give you the full state pension about £9,000 opposed to the basic state pension which is about £6,500/year. If your were contracted out the Government gave your pension company some free cash to invest on your behalf which helped occupational schemes. With a private pension you would get a free second private pension often called a contracted out bond, but reduced state pension.
 

Red_is_best

Active member
I contracted out of SERPS but will still be entitled to the Max State Pension because of my NI record.
That’s interesting, thanks. I am no expert so guessing now: perhaps it depends on how many years you were contracted out before 2012 when SERPS ended? I was CO for over 35 yrs and my SP will be £15 per week less that the maximum - so about 3 yrs worth of NI contributions.
 

zzzzz

Well-known member
That’s interesting, thanks. I am no expert so guessing now: perhaps it depends on how many years you were contracted out before 2012 when SERPS ended? I was CO for over 35 yrs and my SP will be £15 per week less that the maximum - so about 3 yrs worth of NI contributions.
I logged onto HM Gov and checked my state entitlement and it says I've maxed out depsite opting out of SEPRS years ago.
 

Red_is_best

Active member
I logged onto HM Gov and checked my state entitlement and it says I've maxed out depsite opting out of SEPRS years ago.
Ok. From memory the website refers to the maximum you, as an individual, can get. That may be less than the maximum state pension which is £179 per week.
 
Top
X