-
The forums will be unavailable for a few hours on Saturday 6th June, when they do return they will initially be in a degraded state with some features missing, but normal posting/reading will be possible. The main website will not be affected by these updates.
New user registrations are currently disabled.
Some other features of the forum are also currently disabled.
Retirement
- Thread starter Shieldsman
- Start date
Horatio Pugwash
Striker
I was in the fortunate position of my pension starting when I was 39.
Unfortunately, I just see it as supplementary to my income now.
As someone posted earlier, you live to your means and I can't see many anywhere missus just dropping my wages and settling for other income
Unfortunately, I just see it as supplementary to my income now.
As someone posted earlier, you live to your means and I can't see many anywhere missus just dropping my wages and settling for other income
Matt Hopkins
Winger
In the last paragraph are you suggesting you may have looked for someone to do this for free? There doesn't seem to be many DB transfers being okayed now and you'll be paying a canny bit in fees.
Also how do you know you can get double by transferring to a DC it's impossible to say.
Bit about leaving a pot is fair enough tho, that's if there's anything left
Everyone has been doing drawdowns for the past few years but you may now find that annuities are pretty good with interest rates being so high. The 4% rule on drawdowns is a bit optimistic and may result in running out of money depending on how stock markets perform over your retirement. You can certainly get an index linked annuity for 4%+ at the moment.
Retirement at 62 has been great for me. I went from renting to buying a flat outright with my tax free portion of my pension fund. Of course I had to move to Sunderland to do that. Two of the best beaches in the country to walk along and a season ticket to the greatest club in the land. Low income to begin with (which is fine for me) and once I get my state pension I will even be able to afford coffee and cake in Fausto.
Retirement at 62 has been great for me. I went from renting to buying a flat outright with my tax free portion of my pension fund. Of course I had to move to Sunderland to do that. Two of the best beaches in the country to walk along and a season ticket to the greatest club in the land. Low income to begin with (which is fine for me) and once I get my state pension I will even be able to afford coffee and cake in Fausto.
Shandy drinker
Striker
Pension at 39!!
That’s not a pension it’s a subsidy
Dr Feelgood
Central Defender
I retired at 56 and for the first couple of years lived on the lump sums and income from a combination of a small FS scheme and my wife's teachers pension. When it came to accessing my DC pots I had planned on taking drawdown but on advice of a Financial Advisor bought a fixed term annuity to see us through to age 67. The thinking was that we were guaranteed sufficient income until State Pensions kicked in. As it panned out it was solid advice as the annuity was bought just before Truss and Putin's activities started to hit the value of pension funds . We still have a pot that I use in drawdown as and when required for car changes and holidays etc.
My advice to anyone approaching retirement is to do as much research into your options as possible - you work for 30-40 years to build up a fund to last the rest of your life, so make sure you make the most of it
Not really an option any more, unfortunately. Or certainly far more difficult since brexit.
You can no longer just buy somewhere over here, up sticks and move here. You have to apply for a tarjeta de identidad de extranjero (basically, a foreigner id card) and apply for a non lucrative visa, which shows that you have sufficient funds in the bank to support yourselves, without working. I believe it's around €38k per couple. You aren't allowed to work in any way, shape or form for 12 months, after which, you can apply for a work visa, though a visa isn't guaranteed unless you can offer a service that a native can't offer.
Brexit has turned emigrating to Spain into a minefield, unfortunately.
crudeFool
Central Defender
When it comes to the 25% tax free cash, you can take it as a one off lump sum. When you then drawdown the remaining money during your retirement, it's then just counted as income and is taxable like all other income with your personal allowance being £12750/year.
But if you don't immediately need the cash, there are advantages during drawdown:
You want to take £20,000 year in drawdown.
Remaining pot = £375,000
Drawdown = £20,000
Total taxable income = £20,000
Personal allowance = £12,750
Tax payable = £1,486
Drawdown after tax = £18,514
Remaining pot = £500,0000
Drawdown = £20,000
Total taxable income = £15,000 (25% of it is tax free)
Personal allowance = £12,750
Tax payable = £486
Drawdown after tax = £19,514
At least the above is my current understanding. Hopefully others will find the above useful or correct me
But if you don't immediately need the cash, there are advantages during drawdown:
- each regular withdrawal can be made with 25% being tax free
- the 25% tax free money still in your pot continues to grow
- if you die, your entire pension, including the tax free portion isn't subject to inheritance tax, so your beneficiaries will get this without having to pay tax.
- if you took a lump sum, then died, this lump sum would be added to your estate, and any monies over £325,000 (or whatever it is) would be subject to 40% tax
Example
You are in for fortunate position to have a £500,000 pot.You want to take £20,000 year in drawdown.
Scenario 1 - Lump Sum
Initial tax free lump sum = £125,000Remaining pot = £375,000
Drawdown = £20,000
Total taxable income = £20,000
Personal allowance = £12,750
Tax payable = £1,486
Drawdown after tax = £18,514
Scenario 2 - drawdown only, no lump sum
Initial tax free lump sum = £0Remaining pot = £500,0000
Drawdown = £20,000
Total taxable income = £15,000 (25% of it is tax free)
Personal allowance = £12,750
Tax payable = £486
Drawdown after tax = £19,514
At least the above is my current understanding. Hopefully others will find the above useful or correct me
Last edited:
ChrisK
Striker
When it comes to the 25% tax free cash, you can take it as a one off lump sum. When you then drawdown the remaining money during your retirement, it's then just counted as income and is taxable like all other income with your personal allowance being £12750/year.
But if you don't immediately need the cash, there are advantages during drawdown:
- each regular withdrawal can be made with 25% being tax free
- the 25% tax free money still in your pot continues to grow
- if you die, your entire pension, including the tax free portion isn't subject to inheritance tax, so your beneficiaries will get this without having to pay tax.
- if you took a lump sum, then died, this lump sum would be added to your estate, and any monies over £325,000 (or whatever it is) would be subject to 40% tax
Example
You are in for fortunate position to have a £500,000 pot.
You want to take £20,000 year in drawdown.
Scenario 1 - Lump Sum
Initial tax free lump sum = £125,000
Remaining pot = £375,000
Drawdown = £20,000
Total taxable income = £20,000
Personal allowance = £12,750
Tax payable = £1,486
Drawdown after tax = £18,514
Scenario 2 - drawdown only, no lump sum
Initial tax free lump sum = £0
Remaining pot = £500,0000
Drawdown = £20,000
Total taxable income = £15,000 (25% of it is tax free)
Personal allowance = £12,750
Tax payable = £486
Drawdown after tax = £19,514
At least the above is my current understanding. Hopefully others will find the above useful or correct me
FA told me exactly the same thing.
If you in a position and don't need to take the 25% lump sum leave it in your pension pot drawdown, and they the portfolio provider can manipulate your drawdown monthly pay virtually tax free for a good few years.
Until you use up the 25% in the meantime all been well it is making money for you.
Fletch
Striker
If I used 4% I would then half that once state pension kicks in, would rather have more in first 10-15 years of retirement
Matt Hopkins
Winger
Bloke called Chris Bourne on YouTube explains all this on one of his many videosWhen it comes to the 25% tax free cash, you can take it as a one off lump sum. When you then drawdown the remaining money during your retirement, it's then just counted as income and is taxable like all other income with your personal allowance being £12750/year.
But if you don't immediately need the cash, there are advantages during drawdown:
- each regular withdrawal can be made with 25% being tax free
- the 25% tax free money still in your pot continues to grow
- if you die, your entire pension, including the tax free portion isn't subject to inheritance tax, so your beneficiaries will get this without having to pay tax.
- if you took a lump sum, then died, this lump sum would be added to your estate, and any monies over £325,000 (or whatever it is) would be subject to 40% tax
Example
You are in for fortunate position to have a £500,000 pot.
You want to take £20,000 year in drawdown.
Scenario 1 - Lump Sum
Initial tax free lump sum = £125,000
Remaining pot = £375,000
Drawdown = £20,000
Total taxable income = £20,000
Personal allowance = £12,750
Tax payable = £1,486
Drawdown after tax = £18,514
Scenario 2 - drawdown only, no lump sum
Initial tax free lump sum = £0
Remaining pot = £500,0000
Drawdown = £20,000
Total taxable income = £15,000 (25% of it is tax free)
Personal allowance = £12,750
Tax payable = £486
Drawdown after tax = £19,514
At least the above is my current understanding. Hopefully others will find the above useful or correct me
Like the way you used the wrong PA but still managed to come up with the correct amount of tax payable
crudeFool
Central Defender
Bloke called Chris Bourne on YouTube explains all this on one of his many videos
Like the way you used the wrong PA but still managed to come up with the correct amount of tax payable
Fat fingers - got the 5 & 7 the wrong way around. It should of course be £12,570. Can't edit my original post now to correctBloke called Chris Bourne on YouTube explains all this on one of his many videos
Like the way you used the wrong PA but still managed to come up with the correct amount of tax payable
I didn't actually do any calculations myself - used:
-
You must be logged on to see external links
You must be logged on to see external links
is good - he's got a great spreadsheet to help with financial planning available.Matt Hopkins
Winger
Yep seen a few of James Shack.
Here's the Chris Bourne one where he explains drawdown, UFPLS etc in an easy to understand way
Here's the Chris Bourne one where he explains drawdown, UFPLS etc in an easy to understand way
You must be logged on to see media items
ChrisK
Striker
No I understand there is a cost to manage my pension if I transfer and I am happy to pay that.
I can take double monthly income or more if i wanted thru a drawdown compared to what my company pension is offering i understand my pot will go down quicker and i could run out but i want the money between ages of 55 to 70 after that I probably need very little to live on there is a risk to it but how many people have stuck with a company scheme and died and virtually all of there pension has just gone back into the company pot.
Cludgie
Winger
I retired at 53 and thought that I'd do fuck all. Unfortunately, after a few months boredom kicked in and mine was exacerbated by the fact that we were in lockdown.
I ended up taking another job on less salary than my previous (pre-retirement) role, but my current salary + pension gives me a far higher wage than I was on pre-retirement.
The key difference for me is that I'm now doing a role with massively less pressure and responsibility, working from home a lot and ultimately I'm working because I want to, not because I have to. That removal of pressure seems to change your attitude towards work quite a lot.
Anyway, all I would say is, don't retire and discount the possibility of ever working again. You might find that it's a lot different from first time round (in a good way).
I ended up taking another job on less salary than my previous (pre-retirement) role, but my current salary + pension gives me a far higher wage than I was on pre-retirement.
The key difference for me is that I'm now doing a role with massively less pressure and responsibility, working from home a lot and ultimately I'm working because I want to, not because I have to. That removal of pressure seems to change your attitude towards work quite a lot.
Anyway, all I would say is, don't retire and discount the possibility of ever working again. You might find that it's a lot different from first time round (in a good way).
Matt Hopkins
Winger
I didn't mean the cost to manage the pension I meant the cost for advice to transfer from DB to a DC type, I think it costs a lot just for them to look at it with no guarantee that it will go through. Although if you work for a certain industrial heavyweight around here they seem to just railroad transfers through for next to nothing, which seems strange.
If you died and had a spouse they would get a widows pension so not all of it is lost, but yes I know what you are saying
but don't come crying to us if there's a market crash and your pot halves overnight, just joking.It comes back to my first post on here everyones situation is different and what's right for one person is not necessarily right for anyone else
Darlo1973
Striker
Hmm.. I have £250k at 50 so it looks like I'm going to need some good stock market performance over the next few years to catch up.
ChrisK
Striker
TBH don't think there is a right or wrong way to goI didn't mean the cost to manage the pension I meant the cost for advice to transfer from DB to a DC type, I think it costs a lot just for them to look at it with no guarantee that it will go through. Although if you work for a certain industrial heavyweight around here they seem to just railroad transfers through for next to nothing, which seems strange.
If you died and had a spouse they would get a widows pension so not all of it is lost, but yes I know what you are saying
It comes back to my first post on here everyones situation is different and what's right for one person is not necessarily right for anyone else
Stick with Company pension you probably need to live to 120 to get all you/company have put into it.
Take a chance on a drawdown it could go tits up but historically it never has always recovered
The
Striker
I was considering doing this as id have got a silly amount more than what was in my old pension, however since rates went up my transfer out value has plummeted to the point id get less for transferring out than what's in the pot. Bond yields shooting up is what is to blame I think.Could just be doing that Mate.
One other thing to consider is many final salary pension schemes want to buy you out.
Ask for a quote, you may be pleasantly Surprised.
Can transfer tax free to another pension, equally take 25% tax free out of the sum.
A fair few pension advisors don’t deal in final salary pensions thus are not listed to be in a position to give specific advice on these pension types. Best ask, most will also know one who can.
Nice one Mate, great it appears to be working out
Matt Hopkins
Winger
120 really?TBH don't think there is a right or wrong way to go
Stick with Company pension you probably need to live to 120 to get all you/company have put into it.
Take a chance on a drawdown it could go tits up but historically it never has always recovered
When you see your FA ask him, well he should probably tell you, about your drawdown and sequence of returns risks. You are right markets do, eventually, recover but it looks a lot different when you are taking money out of your pot.
