We all want a nice future. We work hard now, with one eye on our twilights years where we can travel more, enjoy the grandchildren and relax after a lifetime of graft. What’s our future actually look like though? When you can draw pension? How much will it be and what will it let us get up to after we retire? Let’s have a look at when your state pension will become available and whether or not it’s possible to actually live on it.
When Can You Draw Pension?
The age at which you can draw state pension will depend on when you were born. The current age is 66, however it is due to rise to 67 between the years of 2026 and 2028. You can go online, type in your date of birth and it will give you your date. I will be 68 when I can can draw my state pension. Of course, this could all change over the coming years. As we have seen recently, there is a lot of uncertainty in the world, so relying on the money you get when you can draw pension at a certain age, might not be the best idea.
How Much Will You Get?
That said, it’s worth knowing how much you will get. The current full state pension amount is £179.60. The actual amount you will get depends on your contributions. Check your National Insurance record for your contributions. That is £718.40 every four weeks. Annually, over 52 weeks that works out to be £9339.20. Could you live on that? You might have more chance if you have a partner who can claim their pension. In this case your combined amount would be £18,678.40.
How Much Is The Pension Lifetime Allowance?
Can You Live On Your State Pension?
It’s worth asking the question of can you live on the amount you’ll get when you can draw your pension. The cost of living is on the rise, with households right now paying on average £588 a week to get by. You don’t need a maths degree to see that there is a huge gap between the state pension and the cost of living. This average cost of living takes into account mortgage payments and the money spent looking after children. Even without those factors, the average amount is £63 for food and £40 for recreational and hobbies. That’s over £100 already!
By the time you are of when you can draw pension age, you might not have a mortgage to pay off anymore and your kids might be grown up. There might be less to pay for every week, however you still need cash to survive. To pay for your shopping, heating, bills and your retirement years of travel and excitement. Can you really afford an annual cruise solely on what you get with your state pension? Will your desired twilight years be achievable on the state pension? Maybe not and this is why people invest in private pensions and save extra money for when they are older. It’s also why people don’t always retire when they reach retirement age. They simply cannot afford to.
Think about the things you will need to buy when you are in your retirement years. The question of when can you draw pension is answered however in reality, it probably won’t cover the style of life you want in your late 60s and early 70s.
Start Your Own Pension
It’s a great idea to maximise the amount you can put into an employee pension. That way you will get extra money pad in by your employer. If you’re looking at starting a private pension, the sooner you begin the more you are likely to save into your pension pot. I opened a pension with Penfold. Click through this link and you’ll get a £25 bonus when you make your first payment. It’s a great way to kickstart your future earnings.
Think about whether you could live on the amount you’ll get from your state pension. Remember that the amount of £179.60 per week is the maximum you can get – unless it rises again. That’s the full state pension amount so you might not even qualify for that. The sooner you start considering your future the more likely you are going to be in a situation that allows you to live the life you want.
