Written by Karen Bryan
The question of when are you rich can be pretty baffling. When I was young, someone who was a millionaire sounded extremely rich to me. However, there are evidently more than 600,000 millionaires in the UK. I suppose if you consider that pretty run of mill family homes in the south east of England cost around half a million UK pounds, it’s not really surprising.
I’m trying to work out how much money would make me feel rich. As we’ve paid off our mortgage and own our home outright, I reckon that having a guaranteed personal after tax income of £20,000, index linked to maintain its spending power, for the rest of my life, would make me feel rich. If I estimate I’ll live for another 35 years, I’d need more than £700,000 in savings to provide £20,000 per year. So it is sounding like I’d need to be a millionaire after all.
I’m currently almost 53 years old and plan to keep working, at least part-time, for as long as I’m able. As I’ve been a freelance worker for most of my life, I don’t have a defined benefit pension waiting for me. I do have a stock market based stakeholder pension, but that only comprises of payments made by me, no top ups from an employer, and my pension will depend on the value of shares when I cash it in. At the moment, I think I’ll be lucky if I can get an annuity of around £3,000 when I’m 60. Let’s hope I’m being too pessimistic.
I’m due for a state pension aged 66. The current UK state pension is just over £100 a week (if you’ve made at least 30 years of National Insurance Contributions). That will come to around £5,000 a year.
Therefore, it looks like that between my stakeholder and state pension, I’ll get around £8,000 per year, £12,000 short of my desired £20,000. Just as well I’m thinking of keeping working as long as I am mentally and physically able.