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State Pension Blog: back to the day job

Having lived on £70 last week to get a better idea of what life's like for those on the state pension, Greg looks back on what he's learnt.


by Greg Kingston on Jul 09, 2012 at 14:44

State Pension Blog: back to the day job

Greg Kingston (pictured), along with 100 of his colleagues at pension provider Suffolk Life, has accepted a challenge from his employer to live off £70 a week. That's how much charity AgeUK says a typical pensioner has left after bills, council tax etc. Here's part one of his blog in case you missed it.

I’m very glad to be back on my salary, but I certainly haven’t left the experiences of last week in the past. I wanted to see how living off the state pension compares with living off my salary.

The methodology

Citywire readers clearly have an eye for detail, so this is worth explaining. It isn’t perfect methodology, but it was designed by Age UK to raise the issue.

The state pension is £107.45 a week for a single person. Those taking part in this challenge were given £70, which assumes that the remaining £37.45 went towards the costs of utilities etc.

The results

My salary – I’ve taken my net income and then deducted all the outgoings. To ensure as much accuracy as possible I measured my spending over the entire previous month. I then converted everything to percentages.

Retired versus working: Click to enlarge

Some differences are to be expected. I’d be unlikely to face costs for a mortgage and childcare in retirement, and certainly wouldn’t be able (or even need) to save as much.

But some of the differences are incredibly telling.

The percentage of my income needed to support running my house – electricity, gas, broadband, council tax etc. is far higher in retirement. In fact, they’re my biggest outgoing, shortly followed by food. Despite spending a far higher monetary amount on food when on a salary, the proportional spend is much, much higher when on my low, fixed retirement income.

Discretionary money

I was surprised to see that discretionary spend, as a proportion of income, was broadly similar – in fact I experienced a slightly lower proportion of discretionary income from my salary. Of course, that is far from accurately representing the truth.

Where discretionary money goes: Click to enlarge

Despite spending far more on going out when on my salary, the proportion is less than half compared with retirement. As proved during my week-long experiment, I need to make very careful decisions. On a salary a more carefree approach is possible.

My salary allows me to have more choices of all kinds. I’m able to spend more on my son, buy clothes and even though I’m committed to saving, finish the month not using all of my discretionary expenditure. By contrast I finished my week as a pensioner with precisely £0.22.

Can I avoid a state pension retirement?

I sincerely hope so. I’m currently saving 26% of my net income into my pension, ISA and other savings arrangements. Whether it is enough I’m not entirely sure. I’ll need to get a pension projection and I’m sure I’m not alone in meaning to see a financial adviser but never quite managing to sort it out.

Since leaving university and nearly defaulting on a credit card I’ve also been paranoid about debt. Ever since interest rates dropped to their current levels I try, if possible, to make an overpayment on my mortgage as I’d like to try and whittle down some of the capital.

What this does tell me is that whether or not I need to save more, I can save more. I spent much of the last week talking about how choices and decisions were taken away from me because I didn’t have enough money. I now find myself in a position where I can make a decision – a decision to save more that should give me the chance of having more choice in the future.

I’d have to be an idiot not to take it, wouldn’t I?

Finally, thanks to all the readers and commentators who have followed my blog. Even if I didn’t always enjoy my state pension week, I certainly enjoyed sharing it.

12 comments so far. Why not have your say?

Malcolm Dee

Jul 09, 2012 at 17:45

Although the basic state pension is £107.45/week the State accepts that you cannot live on this and guarantees a minimum pension for a single person of £142.70 and £217.90 if you have a partner. Additionally it will pay your rent and Council tax and possibly interest payments on your mortgage if you have not paid it off. The situation is not as dire as you portray.

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Greg Kingston

Jul 10, 2012 at 09:36

Malcolm - thanks for the comment. Rather than re-explain once again I'd invite you to go back and read the daily blogs from last week. As well as recording my daily experiences they also set the scene for the challenge.


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Paul Barrett

Jul 15, 2012 at 15:34

What you should now do is imagine you have no private income whatsoever or savings and imagine living totally on means tested benefits.

Also you live in rented council accommodation.

You will find that you would have a very comfortable lifestyle compared to someone who has worked hard and saved for a small pension.

The sob stories you hear frrom pensioners are invarably the ones that are penalised for having done the 'right' thing.

They are justified in their complaints.

The means tested pensioners have a very nice lifestyle.

Your commentary should reflect how well people on means tested benefits can live.

Also because they have lived it up all their lives and not bothered saving or particularly working hard they effectively get everything for free.

So don't tell me all pensioners especially the one's on total benefit are hard up, they are not.

They are better off than me when I worked hard for over 30 years contributing more than 11 3/4 % of my gross wages to a pension which pays less than if I was on means tested benefits.

No wonderr the benfit bill is so high when the profligate and fecless get rewarded by govt benefits in their old age having done nothing to provide for themselves once reaching retirement age.

Most of them though are on the sick long before they reach retirement age.

They will notive very little difference to their comfortable benefitd lifestyle just because they reach retirement age.

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Jul 15, 2012 at 15:54

The situation is not as dire as you portray.


It is. The state can't afford these sorts of payouts, because of demographics, and because it spent the contributions. No compound interest.

True government debt (ignoring the MIG, HB etc because its welfare), and debts are 7,100 bn. Government taxation, 570 bn. That's without spending on any services. ie. They are bust.

The victims of that bust will be those that are or have been forced to rely on the state. It will be worse than Greece, because there isn't going to be a fairy god mother like Germany to keep handing over the cash.

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Jul 15, 2012 at 17:11

Greg, keep up with overpaying your mortgage, but make sure that the lender is setting this against capital borrowed. In a few years you will be pleasantly surprised as to how much you are paying back, as opposed to just paying the minimum, as the capital element paid back is growing year by year, making the interest element lower and lower.

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Jul 15, 2012 at 17:50

On the mortgage, its a bit wider. Basically everyone needs a plan. Paying off debt, saving for a retirement, are the two big expenses in life. If you don't have a plan,you won't get there.

Rainy day fund

Any high interest rate loans or credit cards.


Save for retirement.

In that order. Set a target. Pay it off in 10 years, not 20. You will be surprised what you can do.

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Jul 15, 2012 at 18:23

GREG - you state: "I’ll need to get a pension projection and I’m sure I’m not alone in meaning to see a financial adviser but never quite managing to sort it out."

My advice is whatever you do - DON'T GET A FINANCIAL ADVISER!!!!

They are worse than useless; and if you have a modicum of intelligence, which you plainly have in abundance, teach yourself how to manage your own money.

Read The Investors Chronicle, Read Moneyweek, Read the more serious threads on Bulletin Boards. There is help in abundance out there - use it. Then manage your own pension as a SIPP and your own capital in ISAs. Don't pay fees to incompetents.

Oh yes, and keep your ears open for a successful stockbroker. There are still many private client stockbrokers out there who know what they are talking about; though beware, plenty of chaff to sort before you find the wheat. So don't rush that aspect. You may find that you don't need any third party once the stock-market has become a profitable hobby...

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Greg Kingston

Jul 16, 2012 at 07:42

Thanks for the continued comments and interest in the challenge. It does show that plenty of people are aware of the issues faced by many pensioners today.

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Jul 16, 2012 at 07:50

The problem Greg is that I don't think you are aware, as many, as to the cause. Namely government fraud because its running a Ponzi.

For example, where is the state pension as a liability on the government books?

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Greg Kingston

Jul 16, 2012 at 10:50

My own personal view is that those who are not aware of what life would be like if they didn't save are very unlikely to know about how the state pension is (or isn't) funded.

There was an interesting release from the Office of National Statistics last week showing that 1in 4 households have no pension provision whatsoever outside of State support.

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Jul 16, 2012 at 17:55

I agree. Lots of people aren't saving. Not primarily because they are aware about the life they face in retirement, but for other reasons.

1. They are taxed to much too save

2. The state has promised to give them a retirement.

3. There is a strong psychological force to spend it now, rather than defer saving.

However, if you think for one moment that they will get state pension or the MIG, then you are deluded. The state can't afford it. For the simple reason those debts are off the books, just like Bernie Maddoff.

If you want to do people a service, start investigating this.

Secondly. You need to start investigating if the state pension is value for money. For example, what would a median wage earner have received if their money had gone into the FTSE, and not a PAYG scheme. Be prepared to be horrified.

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Paul Barrett

Jul 17, 2012 at 05:53

I don't think you get it, the state WILL afford to pay MIG and Pension credits etc to people who have done NOTHING to save and are council tenants. or even PRS tenants.

The state has NO choice but to afford it as otherwise there would be mass homelessness amongst the lazy benefit pensioners which the govt will NEVER allow.

People who have done the right thing are and will still be penalised.

So the best way is to live it up and then like it or not the state WILL provide as it won't leave benefit pensioners destitute and on the streets.

That is the reality of things I am afraid.

I know of a pensioner who has been working the system for over 30 years and has a free income all state provided of about £40000.

She supposedly has agrophobia, yeah right, doesn't stop her going shopping with all her state benefits she gets!

For the state to provide a pension of about £16000 it would need about £500000 of resources.

EU immigration is costing the state a fortune, I have heard of houses being built in Eastern Europe on the back of UK child benefit.

These EU migrants casn have a fantastic lifestyle on UK benefits compared to being in their own country, which is why they all flock here, our benefit system is ripe for the picking and boy do these immigrants know how to pick!!

All you need to do is 'work' for the3 Big Issue and 6 months later you become unemployed and then you qualify for all the UK benfits.

why do you think 80% of 'Big Issue 'sellers are Romanian gypsies.

They are serving their apprenticeship to qualify for UK benefits

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