In our Pension Diaries series, we speak to people of all ages in the UK to find out how much or how little they have saved for retirement and the realities of putting money aside for your future.
This week, we speak to Sue Hanning, 74, a retired deputy headteacher who lives near Lichfield in Staffordshire.
Sue, who has been married to Andy for 25 years and has a daughter and a seven-year-old grandson, believes she did everything right when it came to pensions and retirement – either by choice or by chance – and she is enjoying her retirement years without any money worries.
Why did you decide to become a teacher and how long did you do it for?
My father Herbert died when I was 17 and I remember him telling me I should always be financially independent and never depend on a man. I really took that on board.
My mother repeated the same thing to me later. She was from the generation where mums stayed at home, so she never worked.
My father also told me that I could be whatever I wanted to be and it didn’t matter that I was female.
I decided to become a teacher and I ended up doing this for the whole of my career. My inspiration was a headteacher at my grammar school. We got a new headteacher who was young and I thought she was brilliant and knew I wanted to do that. But I wanted to do primary school teaching, not secondary.
I became a primary school teacher at 21 and carried on teaching until I retired at 64. Unlike many women my age who went into teaching and went part-time or left as soon as they had children, I always worked full-time. I had one child, my daughter, and I just took six-and-a-half months maternity leave. When I retired, I was deputy head at a primary school and had been doing that for the last 10 years or so.
I enjoyed teaching, as it felt like you were giving something back to society. I always worked in a deprived area, which I found very rewarding.
How many pensions do you have and what is your income?
As I was a teacher for all of my career, I only have one work pension – my teacher’s pension – which I paid into from the age of 21 until I retired at 64.
I was eligible to get my full state pension from the age of 61, but as I was still working at this point, I deferred it for a full three years.
The reason I did this was because I was already a higher rate tax payer with my salary. If I had taken it at 61, I would have been paying higher tax on that pension, so it would have been meaningless.
Instead, I deferred my state pension until I had retired from teaching. For people who reached state pension age before 6 April 2016, for every year you deferred your state pension meant a 10.4 per cent increase in your state pension.
So the yearly amount people on the full old basic state pension get now is about £9,600 a year. But because I deferred mine and only started claiming it three years after I became eligible for it, I actually get more than £13,000 a year from my state pension. I get a bigger state pension than my friends who are on the full new state pension. They can’t get their heads around that.
I could have lost out if I had become ill and died. But for me, deferring my state pension was definitely the best thing I did.
The other great pension decision I made was to pay into my teacher’s pension for all my career.
To be honest, I didn’t know that I had a choice of whether I paid into it or not. I thought it was something I had to do – but I am very glad I did as I have a very good pension now.
When I retired from teaching, with it being a final salary pension, I get a set amount for life. I had the choice of whether to take the biggest amount of pension – around £29,000 a year – and a smaller tax-free lump sum, or a smaller yearly pension and a bigger tax-free lump sum.
I decided to take the minimum yearly pension, which at the time was about £23,000 a year, and the maximum tax-free lump sum, which was around £165,000. I took the minimum yearly pension as I knew I would be getting my deferred state pension as well, so I didn’t want to risk going into higher tax.
My teacher’s pension is index-linked, and goes up every year, so I now receive around £31,000 a year from it. Then I get around £13,000 a year from my state pension, so I have about £44,000 a year coming in from pensions.
I feel awful sometimes as my income is greater than my daughter’s and she has to work, but as I am retired, I don’t actually have to get up and go anywhere. I worked hard to get to this stage. My daughter says I shouldn’t feel bad as I worked hard for my pension and deserve it. My worry is actually that I don’t want to creep into higher tax.
Do you have any pension regrets?
I don’t have any pension regrets as I think I did everything right when it came to pensions, whether by decision or by chance.
I am glad I followed my father’s advice and was financially independent and never relied on a man. I have been married three times and I was always the breadwinner.
My husband Andy is 67 and he used to be in the RAF. When we met, he was studying for a degree in later life, and he did numerous jobs, including being a driving instructor. He became a house husband from the age of 50.
I am glad I went without in my younger years and instead put money into my pension to save for retirement. It is delayed gratification. When I was a younger teacher, I had friends who worked for private companies who didn’t bother paying into any pension scheme and I was a bit envious because they had more money for things like clothes and bigger houses and holidays abroad.
When I was younger, I went without holidays abroad, and instead of buying lots of new clothes, I had to make do and mend. And because I was the main breadwinner, I always worked. But being careful then has paid off now as I am enjoying a lovely retirement.
How do you spend your retirement?
When I took my £165,000 lump sum after retiring from teaching, I had a holiday home in Wales and I spent about £20,000 modernising it, and I invested the rest of the money.
I no longer have the holiday home as I decided to sell it. I helped my daughter with a deposit for a house with the money I got from that. As well as the income from my pensions, I have a stocks and shares ISA and savings accounts.
I have a great retirement and I usually go on between three and five holidays abroad. My husband won’t fly, so we enjoy breaks in the UK, but I go abroad with friends. I recently booked a spur of the moment trip to Nice with a friend and I am planning a holiday to India with another friend.
We live in a three-bedroom semi-detached house, but we are actually looking at moving and I want to upsize, rather than downsize. I can’t take the money with me and I have always had smaller houses. I would love a bigger one.
What are your future dreams in retirement?
I want to enjoy the money I have got, but I also want to know that when I die, my daughter and grandson will be given a nice surprise from me to enhance their lives.
My ultimate goal for retirement is to stay healthy and live as long as possible. I want to beat my grandmother, who lived until 87.
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