It’s Pension Cut-Off Day And You’ve Probably Run Out Of Money

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If you are relying on the state pension to fund your retirement, then you have run out of money until the end of the year, according to a financial firm.

The state pension offers a couple £16,593 a year, while figures from the Office of National Statistics put average annual spending for a retired couple at £21,770.

The difference – £5,177 a year – should come from savings, investments and personal pensions.

The cut-off day, says retirement financial adviser Just, was October 6.

Stephen Lowe, who is group communications director at Just, the state pension adds up to a significant slice of income for most pensioner households.

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Struggle to save

“It still only covers about three in every four pounds that the average couple has available to spend over the course of a year,” he said.

“Of those accessing pension benefits, seven in 10 are aged under 65 and, of those around 60% take a full cash withdrawal.

“That is fine if they have other sources of capital or income, but many people struggle to save enough into a pension.

“Taking it out of the pension years earlier than necessary could well harm its future income potential.”

Making up that £5,177 a year takes a lot of saving with banks and building societies paying such low rates.

Optimistic investor

An optimistic investor would consider a pot of about £200,000 would offer an annual income of £5,000 a year, but after Brexit, that could rise to even more depending on how the economy fares.

Even on an income of £21,770 a year, a pensioner couple would need to live on a tight budget and make same sensible financial decisions to keep on track.

That would mean a lot of time looking for the cheapest deals, such as utilities, broadband and insurance.

“If you’re not already living on a budget, it might be worth starting to make cutbacks now so that you get used to living on a set income,” says Just.

“You should think about cutting costs, looking for deals and offers for older people and deal with debt while you are still working if you can.”

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