State Pension

See, the calculators get it wrong quite often because they ignore the biggest income source that most retirees have.

And that is from 67, the state pension is going to cover about 42% of that £2,500 target.

and a lot of the online tools that i've seen actually pretend it doesn't exist they just talk about the income that you need from your pot ignoring what the state pension itself is going to give you so have a look here you know on the left the standard calculator answer it bills two to seven hundred and fifty thousand pounds and on the right the real number one state pension the tax rules and the real spending accounting and i get it to around three hundred and ninety thousand pounds so that's a 360 000 pound difference uh which is years of your life that you might not need to spend at a desk having to say so by the end of this video you know exactly which side to trust but get this number wrong in one direction and you do run out of money in your early 80s get it wrong in the other direction and you basically end up wasting your healthiest years working for a pot that you might actually never end up spending So no wonder so many people either panic or give up.

If nearly half the country is planning blindly, knowing your actual number I think is the whole game to making sure you successfully retire at the right time.

By the end you'll know your exact number, what it looks like at every age and what to do if you're short.

Basically, I'm working, assuming you're a single person with a pot of money rather than a final salary scheme.

You're retiring at 60 with the full 390,000 pounds.

I'm assuming that your mortgage is paid off and your state pension is going to arrive at a 67.

Pressure is mounting on the pension system in the UK.

The OBR recently released a report in which they were critical of the current state pension system, and the IMF have again suggested to the UK that they should scrap the triple lock.

This comes at the same time as pension minister Torsten Bell has announced that he'll be reviewing the state pension age again.

The last time we had one of these reviews was in 2023.

We weren't due another one until 2029.

Look, I'm a delicate flower.

I want to be liked just as much as anyone else, but I don't need to win votes.

So today I want to have a conversation with you about the realities of our state pension system, the triple lock, and suggest ways that we can fix this mess.

Yeah.

maximizing your uk state pension okay so this is just such an such a an obvious one such an easy win this it's not again not going to change your life so i like to call this beer money for our clients but you um you can back pay into your uk state pension you can't do this in social security Okay, but the UK pension, UK state pension does allow you to.

So you can go back six years and you can pay every year going forward.

And what you want to do is you want to get to 35 years, which is the maximum.

And it's a no-brainer because you're here building social security and social security is much, much, much more generous.

And it used to be the case that if you didn't have full social security, you were penalized under something called the Windfall Elimination Provision.

and that reduced the amount of social security you received because you received the UK state pension.

That's gone.

This could be tripping over into advice here.

Equity and AVC pots to provide the required income top up each year until we reach state pension age without overly diminishing the capital.

That's an interesting line.

We want to use residual funds to allow us to overwinter in sunnier climes.

But basically what he says sort of makes sense, doesn't it?

It does, yeah.

I mean, the nice thing is once you get to the state pension age, assuming you've both got full state pensions, It's £25,000, £26,000.

£26,000 is going to be in it shortly.

So this is basically coming from a defined contribution pension.

I'm assuming that you're going to retire at 65 and the state pension is going to arrive at 67, which is the age for most people from here on.

So the pot works alone for just two years.

And once you're retired, I'm going to assume that the pot grows by about 4% a year.

And these numbers are for one person.

I'm assuming again that the mortgage has been paid off.

A couple gets two state pensions and obviously needs less each.

Now your situation will differ, so just treat this as a framework and not your answer.

[upbeat music] Hello, and welcome to the Personal Investor podcast.

Today on the show, Jemma Slingo is here to walk us through the government's proposed change on how the state pension will rise in the future.

Is this really still a triple lock? And why are so many people misunderstanding the reform? That is our focus today.

If you enjoy the show, please rate us, share us, or leave a comment wherever you get your podcasts.

[upbeat music] Hello, everyone, and welcome back to the Personal Investor podcast.

I'm Ed Monk, and I'm joined today by Fidelity's Jemma Slingo to talk about an important change to an important part of the UK financial landscape, and that is the state pension.

The government has announced that it will legislate for a change to the triple lock that governs how much the state pension rises each year.

So what has been proposed? How will it impact the payment? And will any of it actually happen? Before that, let me remind you that if you find this video useful or interesting to please subscribe to the channel, give us a like, leave a comment if you wanna do that.

So we've, we've got, um, a little minor piece to do before we get into the main meat of our episode today.

Um, in the news there's an item, uh, there's a lot of discussion that the government are saying they're gonna abandon the state pension triple lock, and we just thought, well, is that worth chewing over? What are the implications? Is this good, bad or indifferent for us? What do you think, Mike?

I think it's not surprise.

It's not a surprise in any way because we all knew that the triple lock was unsustainable.

It's a very, very minor change, and it's not gonna make that much difference.

But I think people need to be aware of it, and it kind of leads into today's episode quite well.

Yes, because we are gonna touch upon state pension with this.

Um, I should include our disclaimer because we're gonna touch upon some investment discussion today.