The Motley Fool

Can you really survive on the State Pension alone?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Piggy bank next to a financial report
Image source: Getty Images.

Financial experts are always telling us to save as much money as possible for retirement. Yet, in reality, many British adults don’t save anything for retirement at all throughout their careers. They’re under the impression that the State Pension will provide enough money for them to get by, once they’ve finished working. 

But can you actually survive on the State Pension alone in your retirement years? Is it enough money for a comfortable retirement, or will you be eating beans on toast every night? Let’s look at how much the State Pension actually is and compare that to how much money people generally spend in retirement.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

£10,000 for a basic lifestyle 

Currently, the State Pension is just £164.35 per week, which equates to £8,546 per year. Is that enough for a basic lifestyle? 

Possibly not, according to recent research from the Joseph Rowntree Foundation (JRF), a respected charity. After surveying members of the public on retirement spending, JRF calculated that the income needed for a single retired person to live a minimum acceptable standard of living (more than just housing and food) is around £10,000 per year.

According to JRF’s calculations, £10,000 will provide enough money for a basic lifestyle that includes things like a mobile phone, internet access, alcohol, presents for grandchildren and a week’s holiday in the UK per year. However, the £10,000 figure also assumes that the individual uses public transport only, spends less than £20 per month at restaurants and has no luxuries such as pay TV or a dishwasher. 

While this £10,000 figure is just a guide, the research suggests that, realistically, trying to survive on the State Pension alone could be an uphill battle. Once essential expenses such as food, healthcare costs, transport, and household bills are taken care of, there’s unlikely to be much left over to spend on non-essential expenses such as entertainment, new clothes, or holidays. Were you planning to catch up with friends at the pub every week in retirement? If you’re living off the State Pension you can forget it. Planning to spend two weeks in Spain in July every year? No chance. Retirement on the State Pension may not be what you thought it would be. 

It’s never too late to start saving 

If the thought of trying to get by on £164.35 per week scares you, it’s probably a good idea to do something about it… sooner, rather than later.

No matter your age, it’s never too late to start saving into a pension or an ISA for your retirement. Even just a small contribution of £50 or £100 per month could make a big impact on your retirement savings in the long run. It could be the difference between counting your pennies every week for the next 30 years and living a more relaxing, enjoyable lifestyle. Be disciplined about saving and investing for retirement now, and you may be able to enjoy your golden years as you imagined them.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.