If you’re relying on the state pension you’re screwed!
Do you see your retirement, as a blissful period fulfilled with not having to answer to a boss or having the pressure of getting clients if self-employed?
You are finally in control of your time. Congratulations!
However, you are far from in control of your finances.
The UK state pension is currently just over £8,750 per year which is less than the minimum wage and, quite frankly if you’re relying on this – as the title suggests – you’re going to be screwed and I’ll tell you why.
Let’s assume, on average you spend £250 per month for food and other household items, £100 for electricity and gas, £150 for council tax, £250 for the car payment (as most people in retirement want a car they can rely on), another £100 for petrol, and let’s say £150 to cover clothes & treats.
That comes to £12,000 per year, so you’re immediately short by £3,250! Furthermore, we haven’t even discussed holidays, vet bills for our beloved pet, or emergency repairs to the house…
But, perhaps you live with someone else, which would take your joint pension income to £17,500, but you’ll have double the food and double the treats so your total outgoings are now £16,800, thus leaving you both a total of £700 a year (£350 each) to spend on holidays, vet bills, or emergency repairs to the house.
As you can see, you’re going to be financially screwed!
Let’s say, based on the above, you get very creative with making your money last, by buying discounted household products or food that’s on offer, but what happens when the council rates go up, or the energy company put their prices up? The savings generated from your ‘money creativity’ is then immediately soaked up by these organisations who have full control over the price you pay for their products & services, that you need to live on.
Furthermore, we haven’t even discussed the government itself yet, who has the ultimate power about how much you get! We’d all like to think they’ll put the state pension up in line with price hikes across other services & products, but you have no say in this. You will ultimately be in the hands of the government (at local level & national level) and the energy companies.
Sorry to be blunt, but we all need a wake-up call…
Whilst I personally don’t think pensions are the only answer – they too can be dependent on powers out with our control – you do have to be thinking ahead about your retirement, and doing something about it now!
If you would like to find out what your options are, and get help with the anxiety or fog when thinking about pensions, or just the future in general, please come along to the next non-jargon, myth busting retirement workshop we’re running with a financial advisor, or speak to your own financial advisor or accountant ASAP.
Carry out an act of self-love today. Your future self will be very grateful.
You can also find some helpful tips in a previous blog – here.
By Helen Monaghan
Accountant, Coach, and Author
© HM Finance Coaching Ltd