Is a £50K PENSION POT enough for retirement? Episode 1 Pension Income Planning
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- Опубликовано: 26 ноя 2024
- In this first episode of a pension income planning series we look at your options with a £50K/$50K pension pot. I provide an example of whether the pension income is enough using my essential monthly bills - just substitute those figures with your own monthly bills to work out if the income will meet your needs.
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DISCLAIMER: This is NOT financial advice, it is financial education. Be sure to seek a professional financial advisor for advice tailored to your needs.
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simple answer is No £50k is not enough
Well this explains why all the pubs are always full of pensioners having pints and lunches in Edinburgh. £50k (£60k adjusted since this video was made) is not enough for a single person unless they are really frugal. There's no room for emergency repairs, or new clothes, or a replacement second hand car.
The problem with a lot of this, is you are assuming people are getting the full state pension. However according to the Government only 44% of those eligible are getting this , meaning 56% of recent retirees fail to pay in enough N.I to get a full state pension. People on modest private pension savings really should be topping up any N.I shortfalls to ensure they get a least the full state pension, as the rewards of paying more N.I far exceed private pensions benefits for the vast majority of low/ middle earners & we know the State Pension will increase annually by a reasonable amount with the triple lock (excluding 2021s anomalies) .
Thanks for your comment. I have other videos warning people of that fact and how to check whether individuals have enough qualifying years of NICs. I cannot cover every aspect of every subject in every video! I agree it is extremely important for people to check their NIC record and mention it often on my channel and I am open in sharing that whilst I have worked since I was 15 years old, I have 8 years of employment which do not qualify towards my NI record.
While 56% may not yet be getting full state pension, they may be getting very close to it, for instance my wife needs to work 3 more years to get the full pension, but currently sits £9 a week short of a full pension. This is one of the issues with stats we get given, It would be interesting to know how short the 56% are from full pension
Thanks for the info, its answered a few questions I wasn't sure about.
Glad you found it useful, thanks
What age are the people on these average pension pots?
It is only barely enough if you have no rent or mortgage to pay in retirement and you are single. Some people may be able to downsize and release some equity for investment. As an expat, I had only 5 years of NI contributions left to pay to get a full state pension but then the government moved the goalposts and I now have to pay 10 years. I will only get 60% of the government pensions in Canada (CPP & OAS) so I have paid 10 years of voluntary contributions. I am lucky to have 2 defined benefits pensions from the UK which will provide me with more income from the UK state pension and I also have a registered retirement pension with my employer in Canada who pay in $2 for every $1 that I put in up to a maximum combined 9% of my basic gross salary. I also invest into tax free savings accounts to provide me with tax free income in retirement. I encourage everyone to invest as much as they can if possible especially if you are within 10 years of retirement
Agreed. This week we look at a £100K pension pot and in next week's episode we look at larger pots and simulate income.
Won't your UK state pension be frozen if you're in Canada?
It'd be interesting if Pension Bee provided figures for Median pot size. Normally there is massive distortion from those at the top end and the median is often far lower than the mean figure. When someone tells me they aren't paying into a pension, I remind them that if they think the state pension is tight, they'd probably need a pot of 200k to match it!
I too am wary of 'averages' stated such as by the ONS, PensionBee and others as they do usually use the mean average and always fail to give the max and min values used in the calcs or the standard deviation. The median or the mode average would give a more typical value than the mean.
Too true about the 200K pot as well!
Surely as we have had 20 years of the government making employers provide pension schemes most people’s have a pot larger than that. Those figures shocked me as I missed out on about 10 years of saving into co pension schemes but have way more than that saved plus a DB scheme offering £9K year if I don’t take any tax free cash.
I am. Nearly 62 and the critical thing for me is to keep working till 66 as still have over ten years of mortgage left. My spare cash is going into pension fund not the mortgage, with interest rate fixed at only 1.3% on the mortgage. As I get my tax back on any money going into pension pot. Paying the basic 5% into company/Nest as well
@@guyr7351 I think the trouble is that most people weren't paying in in their 20s and only really think about this in mid forties to mid 50s. Although auto enrolment has been around for 10 or so years, you could still withdraw. Looking on a compound interest calculator, paying 100 a month between 20 and 30 and then leaving it gives a pot of 199,154.00 after 35 years to take you to retirement at 65. But starting at 30 to 65 paying in 100 a month at 7% for that 30 years gives 180,105.46 . I'm in my early 40s and just having to correct all this now - it's never too late!
@@rogerandout808 it sure isn’t, my first Job in 1977 I had to join the pension scheme at 18, and apart from a ten year blip have been in schemes ever since, now 61. In my last job which was well paid I was pouring money into my pension via salary sacrifice, bonus’s etc. I have 3 and a bit years before I can access a defined benefit scheme and another year for state pension. My calculations and projections see my wife and I OK with a monthly income just below what we have now but we won’t have the mortgage to pay plus the 25% tax free in the bank. Just have to get through the next 4 and a bit years without the brown stuff hitting the fan
@@guyr7351 Thanks for your comment. The problem with published averages is they tend to provide the mean average, which is not the best type of average to use with data that is more suited to categories, such as typical pension pot sizes, average salary etc. I do find it frustrating that the mode average is not used or at least provided in addition to the mean average.
Many people are also likely to pay the minimum into their pension or even opt out. Low incomes will also have a big drag on the mean average pension pot size, especially as employers are only obliged to pay 3%.
The Annuity route seems like an absolutely terrible option mathematically.
Good simple little video.
The £2600 for a £50k pot doesn’t have any index linking. In practice £50k will only provide a small top up to the state pension.
What happens to the pension pot if you die does it get paid to a partner or children or disappear into pension company fraud ie it’s my pension pot not the pension companies
When I retire at state pension age my wife will stop working. Can I use part of her tax allowance to reduce my tax bill? Thanks
Great video as always. Thanks Helena! 😊
Thank you
2600 that’s not indexed link though ,this is a significant factor
Awesome video ..gr8 work
Thank you
This pension pot will give you a comfortable retirement living for free on the street and begging for money.
I wonder how much 50k will be worth in 30 years when I retire, it will probably only last a few months when taken inflation into account.
Here's a run down on what retirement income you can expect from a £50k pension pot
@Louis76 no the government wants us as individuals to look and save into our own pots and. not rely on the state pension only.
A pity you cannot delete the comments from people inviting viewers to invest in Crypto currency etc
I reported as spam 👍
@@rogerandout808 Thank you
Who would possibly need more than £2,600 per year on top of a full state pension of £9,339 per year?
Anyone who is renting - for a start...
This is a great video with some amazing information. I would love to hear your thoughts on a person with £100,000 private pension pot at 55 and what options are available?
Thanks. This coming Wednesday, I am releasing a video on a £100K pension pot as part 2 of this series.
Keep working
Interesting