A financial expert has warned people relying solely on state pension payments from the Department for Work and Pensions
DWP sending £238 out to retirees ‘completely separate from state pension’
State pensioners have been warned over a common mistake – with personal finance experts reminding them of their “rule of thumb.” A financial expert has warned people relying solely on state pension payments from the Department for Work and Pensions (DWP).
Antonia Medlicott, Founder and Managing Director of Investing Insiders, explained: “Whilst circumstances vary from person to person, the state pension is really only designed to cover your basic needs.”
According to the latest Retirement Living Standards report, the average cost of a ‘minimum’ retirement stands at £13,400 per year for a single person.
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She said “The general rule of thumb is to have a pension pot consisting of around 10 times your annual salary before you retire in order to have a moderate to comfortable standard of living.
“An annual pension income of around £31,700 for a single person, or £43,900 for a couple, puts you in the ‘moderate lifestyle’ bracket, allowing for more financial stability and flexibility than solely relying on the state pension.
“For a ‘comfortable lifestyle’, this amount rises to £43,900 for a single person and £60,600 for a couple, offering more financial freedom and allowing for more luxuries to enter your budget.”
The full new state pension currently stands at £241.30 per week or £12,547.60 annually, some £1k shy of minimum retirement standard.
But thankfully, help is at hand in the form of Pension Credit. Antonia explained: “(It) is completely separate from your state pension itself.
“It’s a means-tested benefit that’s used to top up your income, with the main form of eligibility coming from your average income.
“Singles with an income below £238 a week and couples with a joint income below £363.25 are eligible to claim for it, increasing income to these values.
“Additional Pension Credit is also available for people living with certain other circumstances, and those who receive Pension Credit may also be eligible for other support, including Council Tax reduction and Housing Benefit, so it’s important to explore all of the options available.”