‘I enjoy a pension income of £27,600 a year having worked hard all my life’ In our How I Live On series we’re finding out exactly how people in the UK spend, save and invest […]

In our How I Live On series we’re finding out exactly how people in the UK spend, save and invest their incomes to meet their costs and achieve their goals.

The aim is to build an accurate picture of financial life in Britain at a time when unemployment is at a record low but wage growth is stagnating.

This week we speak to Alison Kaye, a 71-year-old activist and retired biology teacher from Bristol, who uses her pension income, property and some clever savings tricks to live a comfortable life.

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Annual income (after tax):

State pension £9,500

Teachers pension £6,850 after tax

Second teachers pension £3,636

Annuity £368

Income from second property £5,776

Feed-in tariffs £1,500

Total: £27,630 per year (£2,302.50 per month)

Regular monthly outgoings:

Council tax £90

Phone, mobile and broadband £40

Energy £50

TV licence £12

Insurance £10

Charitable donations £100

Gym membership £20

Pilates, yoga and swimming classes £100

Gym, swimming and magazine subscription for grandchildren £50

Choir membership £10

Food £150

Clothes £33

Eating out £33

Entertainment £25

Car and related costs £42

Newspaper subscription (i) £11

Holidays £50

Total: £826

Money remaining: +£1,476.50

I live in Bristol, where I own the property I live in, so there’s no mortgage to pay.

I also own another larger property there which earns me a rental income of £5,776 after tax. I kept it after I downsized to my current home four years ago.

Other than that, I have three pensions – two from my time as a teacher, one provided by the state – and a small annuity, which I was mis-sold! But it still contributes £368 a year after tax.

In total, my pensions give me £22,565 every year, or £20,352 after tax.

Juggling bank accounts

There are four bank accounts that I use to keep on top of my finances. The first I use for the income from my property and any expenditure that’s needed for it. I am currently saving all the money from this in long-term savings with a view to further assisting my children and grandchildren if necessary.

Then there’s a current account, into which my state pension and second teacher’s pension are paid. The bulk of my spending comes out of this account: around £1,050 every month.

I also have a household account into which I pay £350 from this current account, which covers all of my standing orders for household expenditure, charitable donations and anything I spend on my grandchildren.

The fourth and final account is a savings account linked to the current account. Into this I pay my first teacher’s pension. It’s useful as I have instant access to this cash from my current account, so I can move money across when needed for any large expenditures.

It’s always a good idea to keep your savings in a separate account. I’ve maintained a standing order into one savings account or another since I was at a young age. This month, I used this account to buy a freezer.

Energy matters

I also get some income from three photovoltaic installations – one on my old home, one I paid for on my daughter’s home and one on my new house.

The first two have a feed-in tariff of 52p per unit, while the newer one only pays at 15p per unit it generates. Still, it gives me around £1,500 every year in tax-free income, which is a great bonus.

I pay this into the household account I use for my regular outgoings, which include my phone, mobile and broadband bills, council tax, TV license, energy bills and insurance. Also coming out of this account are the charitable donations I make: I try to donate £100 every month.

These come to a total perilously close to £350 each month but my feed-in tariff payments are also paid into this account so that ups it so there is some spare capacity.

I’ve been a feminist and a socialist all my life. I taught biology, chemistry and physics at a variety of secondary schools, worked in a women’s prison in the first domestic violence refuge in the country – and also for the NHS in AIDs and HIV education.

I campaign for environmental issues, too, and recently was in Cardiff leafleting outside a bank that has large investments in fossil fuels.

Regular spending

I try not to spend too much on things I don’t need and have taken care to save carefully for a while, which means I can buy things today and not worry about my finances.

I rarely go out for coffee, for example – at £5 a time it adds up. I can’t help but feel people are encouraged into a profligate lifestyle by advertising.

For clothes, I almost always get these from charity shops as I have a lot more fun hunting for bargains this way. Exceptions include, of course, shoes and underwear! I maybe spend £400 on clothing every year but this depends on whether I might need new walking books, or similar.

Holidays cost my a varying amount, too, as I usually stick to trips in the UK with friends and the odd holiday overseas. I am currently planning a trip to Australia to see my sister and family.

I think it’s important to point out that I have reared my three children mostly as a single parent and have never been supported by a man – though the kids had small amounts of maintenance paid.

I did inherit £30,000 from my parents. With that money and my own, I have managed to buy a one bedroom flat for each of my two younger children and cleared my third’s mortgage.

I find there are not a lot of things I really want so I don’t feel I lead a frugal lifestyle but I imagine that in some people’s eyes I do!