It is estimated that 18% of pensioners that are due to retire this year will have to live on £10,000 a year. Although this doesn’t seem like much in some ways it should be enough to get by on. Most people of retiring age do not have a mortgage anymore so the bulk of income is still there. The most expensive thing after that is council tax as some flats have a monthly charge of £120.
When you are over 60 there are some things that get reduced so monthly bills should be less that when you were 20 years younger. For example you get a free travel card, free NHS prescriptions, free glasses, reduced gas and electricity bills, reduced TV licence and a reduction in council tax payments. Over the age of 60 many do not go on monthly shopping sprees and spend money unnecessarily so in reality you can live on £10,000 a year.
On the other hand those who do not have a private pension and are eligible for pension credit will have to survive on less than £6,500 a year. The reason the private pension forecast is lower than usual is because of the bad stocks and shares market that has caused the recession to plummet even further.
Many people who invested in the real estate business will also be hit as those who are trying to sell this year will find that there isn’t that much profit to be made. On top of that there are not enough buyers to go around so sellers have to drop their prices again to attract would be buyers. Capital gains tax is also set to rise so any profit made will also be questionable.
The best way to put money away for a pension is to go private and take advantage of ISA’s every year as you can save thousands in tax but put it towards your future when you retire. You could also look into buying a property abroad such as Spain, France and Cyprus as you can rent it out the times you won’t be there and have a holiday in your holiday home when you are. You may also benefit from taxes by having a second home abroad.
In 2008 the average pension was just over £18,000 this year it has fallen £16,500, that’s a 11.5% drop, the best pensions are from the government such as the council and NHS. Other private firms may also offer competitive pensions so shop around before you choose one. Its well worth planning your pension when you’re in your 20’s as many soon forgets and retires with nothing.