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Retirement

Those of you that retired early, what did you choose to do with your private pension when you accessed it? Did you take a tax free lump sum? Did you leave that and instead take a tax free element on smaller withdrawals? Did you just take out as and when you needed cash or go into regular monthly drawdowns? Perhaps you took out an annuity.

I'm probably going to start accessing mine after past few years of living off ISA cash and job income (where I'd worked short term). An up and coming house move is going to take up some of the cash I'd have possibly used (before the pension) to live on.

I want the pension to remain invested and I'm not interested in an annuity. I've no intention of putting much money back into the pension other than standard work contributions if I take another job or the limit if not working, so I'm happy to start taking money from it. I don't need a lump sum so I'm thinking of just taking small chunks as and when rather than a regular drawdown.

I'm guessing the only difference between these is one is a manual process and the other is an automated regular one? I think I prefer the manual process as I can make decision on what to take and when (eg. I can take a full years worth of income at once and put it into an ISA/savings). I can also decide not to take it or take a smaller amount I were to get another job.

Anyway, interested to hear your decisions and thought process behind them.
 

I had a small AVC alongside a final salary pension. I chose not to take a tax free lump sum rather I took a small tax free amount each month to supplement my pension until I started to receive my state pension. I still have probably one more year of tax free income, which I am squirrelling away, as soon as that is gone I shall stop making regular withdrawals and only withdraw lump sums as and when required. The aim being to leave a lump in my AVC to pass on to wife or kids but who knows what the future will bring.
What worked for me may not work for others, it's all down to personal circumstances.
 
Shack said:
Those of you that retired early, what did you choose to do with your private pension when you accessed it? Did you take a tax free lump sum? Did you leave that and instead take a tax free element on smaller withdrawals? Did you just take out as and when you needed cash or go into regular monthly drawdowns? Perhaps you took out an annuity.

I'm probably going to start accessing mine after past few years of living off ISA cash and job income (where I'd worked short term). An up and coming house move is going to take up some of the cash I'd have possibly used (before the pension) to live on.

I want the pension to remain invested and I'm not interested in an annuity. I've no intention of putting much money back into the pension other than standard work contributions if I take another job or the limit if not working, so I'm happy to start taking money from it. I don't need a lump sum so I'm thinking of just taking small chunks as and when rather than a regular drawdown.

I'm guessing the only difference between these is one is a manual process and the other is an automated regular one? I think I prefer the manual process as I can make decision on what to take and when (eg. I can take a full years worth of income at once and put it into an ISA/savings). I can also decide not to take it or take a smaller amount I were to get another job.

Anyway, interested to hear your decisions and thought process behind them.
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Thing you have to remember is state pension is taxable and now pretty much the same as personal allowance. So the longer you leave it, the more you'll be taxed on it. If I was going to do your route, I'd be drawing down £12,500 of pension as a minimum just to max that out (unless you have other taxable income streams)
 
42 said:
Thing you have to remember is state pension is taxable and now pretty much the same as personal allowance. So the longer you leave it, the more you'll be taxed on it. If I was going to do your route, I'd be drawing down £12,500 of pension as a minimum just to max that out (unless you have other taxable income streams)
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Yes, that's my plan, always one eye on maximizing the money as tax efficiently as possible. Once I get to state pension age then I need less from the private pension to make it up to the required budget.

The question was more to do with what choices people made when it came to accessing their pension.
 
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Reactions: 42
Darlo1973 said:
I think that the only way that would be possible is that if he is diagnosed with a terminal illness and has under 6 months to live. If that's the case then he may as well blow it on a 5 star holiday - though I'd be going further than Spain.
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Best mate took redundancy and retired early last year at 58, hasn't touched his pension, looks after his mother (dementia sufferer), delivering Amazon parcels when he needs cash. Diagnosed with oesophagus cancer beginning of the month, given 6mth to live yesterday. Life so unfair. So many on this thread advocating planning for early retirement, do it if you can. You never know what's around the corner.
 
Kobayashi said:
Best mate took redundancy and retired early last year at 58, hasn't touched his pension, looks after his mother (dementia sufferer), delivering Amazon parcels when he needs cash. Diagnosed with oesophagus cancer beginning of the month, given 6mth to live yesterday. Life so unfair. So many on this thread advocating planning for early retirement, do it if you can. You never know what's around the corner.
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You hear so many stories like that. A bloke I worked with clung on for years, and I'm sure he was at least 70 when he retired. He was very senior so on a good wage too, most likely didn't need the money. He died within months.

Stay physically healthy, stay mentally healthy with plenty of stuff to do, get out as soon as you can and enjoy is my plan and advice.

I normally work remotely and stop in a hotel if I need to do back to back days in work. There is a big event on near where I work and everywhere was fully booked, so I stopped at a local campsite. In my late 40s, I think I was the youngest one there. The rest of the site was fully of happy chilled out retirees in camper vans. One had big letters on the back saying "Adventure before Dementia". Not the crazy fast pace luxury that ambitions are supposed to be, but touring around in a camper van doing lots of walking and canoeing appeals to me.
 
Shack said:
Yes, that's my plan, always one eye on maximizing the money as tax efficiently as possible. Once I get to state pension age then I need less from the private pension to make it up to the required budget.

The question was more to do with what choices people made when it came to accessing their pension.
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@42 sort of said what he'd do. Drawdown. I've done exactly what he said 👍 post#1576
Kobayashi said:
Best mate took redundancy and retired early last year at 58, hasn't touched his pension, looks after his mother (dementia sufferer), delivering Amazon parcels when he needs cash. Diagnosed with oesophagus cancer beginning of the month, given 6mth to live yesterday. Life so unfair. So many on this thread advocating planning for early retirement, do it if you can. You never know what's around the corner.
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Sorry to hear about your mate. That's terrible :cry:
 
Was chatting to a colleague last night over an ale and asked if he had plans to retire. He's late 50s and has enough cash and he said he had no plans to as he enjoys what he does. Said when that enjoyment stops he will too.
 
Swindon On Tour said:
Late 20’s right through to 60 I was in stressful roles managing teams and it definitely takes its toll.
I was at my old bosses funeral Monday, one of the kindest and most influential people I have worked with. I owe him a great deal. I was the youngest in the office, a real joker. It was lovely to catch up with one of the girls in the office at the funeral where we shared stories and laughter. At that time I didn’t have any team responsibilities back then.
At 60 I was burnt out. Had no enthusiasm for the role, no motivation and was tired.
Took the decision to get out. Finding it strange to adapt mind and know it will take time. Miss the money but not the stress and burn out.
You have to stop some time and it just felt right. My problem is I struggle to sit still, have to be doing something. Marrying later in life and thus having kids later in life can be challenging but something you just have to deal with.
I need to stop worrying whether I have enough money. That is partly a legacy from my old job mixed with guilt and wanting to do everything for my kids that I never had when I was younger.

If you think back to when you were in your early 20’s. You would have labelled 55 and 60 as old and here we are 😂
You have to accept it and health becomes the key driver.
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I'm looking at it like What of I lost my job tomorrow
I'd just have to manage
I can afford to walk away for a bit and just rewind
Plenty of lapsed hobbies to pick back up
I had a son at 42 so he's 19 now but he'll do ok as his mother and me both have houses .
 
Shack said:
Those of you that retired early, what did you choose to do with your private pension when you accessed it? Did you take a tax free lump sum? Did you leave that and instead take a tax free element on smaller withdrawals? Did you just take out as and when you needed cash or go into regular monthly drawdowns? Perhaps you took out an annuity.

I'm probably going to start accessing mine after past few years of living off ISA cash and job income (where I'd worked short term). An up and coming house move is going to take up some of the cash I'd have possibly used (before the pension) to live on.

I want the pension to remain invested and I'm not interested in an annuity. I've no intention of putting much money back into the pension other than standard work contributions if I take another job or the limit if not working, so I'm happy to start taking money from it. I don't need a lump sum so I'm thinking of just taking small chunks as and when rather than a regular drawdown.

I'm guessing the only difference between these is one is a manual process and the other is an automated regular one? I think I prefer the manual process as I can make decision on what to take and when (eg. I can take a full years worth of income at once and put it into an ISA/savings). I can also decide not to take it or take a smaller amount I were to get another job.

Anyway, interested to hear your decisions and thought process behind them.
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I'm still a few years off from making this decisions but I'd be interested in hearing other perspectives and the options and tax implications look confusing.

Like you, I have zero interest in an annuity. Too many people were forced into them in the past. My dad got an especially bad deal from his.,

My current thinking is to avoid drawing on the private pensions for as long as possible a spend a couple of years living of savings and maybe some part-time work but still ununsure about the pros and cons of taking the maximum lump sum
 
joebolton said:
Congratulations

Out of interest , what type of things do you do with all that free time. Like all day every day gives me the chills still.
Did you start new hobbies or something ?

I am still in the happy state of looking forward to work on a Monday morning by the way. Probably why I’m asking.
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Been retired 6 months, so early days. I didn't want to jump into anything like volunteering/new hobbies straight away as needed time to chill and decompress after several decades of work, although I may do these things in the future. I am not someone who always needs to be doing something - I can happily sit and read or watch a box set for hours.
Currently a typical day is as follows:
- Get up around 7ish as wife is still working :lol:
- Breakfast and coffee and then go to gym/run. Can spend a couple of hours in gym, although know a few people there, so involves lots of chatting also.
- Have another coffee and read paper late morning either at home/or meet mate in town for coffee
- Lunch
- Afternoon: couple of hours DIY - I am slowly redecorating house, no rush as I don't need to fit it in on weekends/evenings. (DIY on hold at the moment while there are 2pm kick-offs at the Euros). If I feel like it, I'll also fit in a siesta.

My wife retires from teaching at end of term in 4 weeks, so we plan on doing a lot more travelling/days out.

If you still enjoy your job, then that's great and it's fine to keep working. I would have kept working longer if I still had motivation for it.
However, bear in mind that there may be things you want to do such as The Camino / adventure holidays that a few have been discussing on this thread - your knees/hips may feel fine at 55, but may be creaking at 65 and they may not be that easy to do when older, so you don't want to miss the boat.
 
My place just had 4 people retire within a few months of each other.
They all announced at the start of the year that they were going.
I asked one lad why he gave so much notice, I'd have just given the standard 4 weeks.
He said that if you give 6 months notice, you only have to work 4 days out of 5, but on full pay, plus you get a £500 bonus and £400 towards a leaving do.

I'm about 5 years off retirement at the moment, but with the wife a couple of years behind me, I might just rest easy in the knowledge that I can retire and drop the shoulder if I get any hassle or a round of voluntary redundancies crop up and I take the money and run.

So although I could retire at 57, it's probably going to be 60.
 
Barista said:
Been retired 6 months, so early days. I didn't want to jump into anything like volunteering/new hobbies straight away as needed time to chill and decompress after several decades of work, although I may do these things in the future. I am not someone who always needs to be doing something - I can happily sit and read or watch a box set for hours.
Currently a typical day is as follows:
- Get up around 7ish as wife is still working :lol:
- Breakfast and coffee and then go to gym/run. Can spend a couple of hours in gym, although know a few people there, so involves lots of chatting also.
- Have another coffee and read paper late morning either at home/or meet mate in town for coffee
- Lunch
- Afternoon: couple of hours DIY - I am slowly redecorating house, no rush as I don't need to fit it in on weekends/evenings. (DIY on hold at the moment while there are 2pm kick-offs at the Euros). If I feel like it, I'll also fit in a siesta.

My wife retires from teaching at end of term in 4 weeks, so we plan on doing a lot more travelling/days out.

If you still enjoy your job, then that's great and it's fine to keep working. I would have kept working longer if I still had motivation for it.
However, bear in mind that there may be things you want to do such as The Camino / adventure holidays that a few have been discussing on this thread - your knees/hips may feel fine at 55, but may be creaking at 65 and they may not be that easy to do when older, so you don't want to miss the boat.
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Thanks Barista. I have watched this thread for a while , and have felt a little influenced that I should be looking forward to packing up early. At the moment , I really enjoy work , and sometimes even long weekends like Easter drag a bit for me. Believe it or not I look forward to getting back to action and purpose at work.

I have a few ideas , probably get a new dog , maybe go for couple of lunches out , but I think as it stands I will keep at work to 67 , or beyond. Health permitting.

Maybe a hobby will come up in the next few years that gives me the buzz, energy and thrill that work gives me.
 
Barista said:
Been retired 6 months, so early days. I didn't want to jump into anything like volunteering/new hobbies straight away as needed time to chill and decompress after several decades of work, although I may do these things in the future. I am not someone who always needs to be doing something - I can happily sit and read or watch a box set for hours.
Currently a typical day is as follows:
- Get up around 7ish as wife is still working :lol:
- Breakfast and coffee and then go to gym/run. Can spend a couple of hours in gym, although know a few people there, so involves lots of chatting also.
- Have another coffee and read paper late morning either at home/or meet mate in town for coffee
- Lunch
- Afternoon: couple of hours DIY - I am slowly redecorating house, no rush as I don't need to fit it in on weekends/evenings. (DIY on hold at the moment while there are 2pm kick-offs at the Euros). If I feel like it, I'll also fit in a siesta.

My wife retires from teaching at end of term in 4 weeks, so we plan on doing a lot more travelling/days out.

If you still enjoy your job, then that's great and it's fine to keep working. I would have kept working longer if I still had motivation for it.
However, bear in mind that there may be things you want to do such as The Camino / adventure holidays that a few have been discussing on this thread - your knees/hips may feel fine at 55, but may be creaking at 65 and they may not be that easy to do when older, so you don't want to miss the boat.
Click to expand...
I'm much the same, my wife and I retired just over a year ago. Apart from lots of holidays we don't do much different to what we did when we were working just more time to do them in.
 
Shack said:
Those of you that retired early, what did you choose to do with your private pension when you accessed it? Did you take a tax free lump sum? Did you leave that and instead take a tax free element on smaller withdrawals? Did you just take out as and when you needed cash or go into regular monthly drawdowns? Perhaps you took out an annuity.

I'm probably going to start accessing mine after past few years of living off ISA cash and job income (where I'd worked short term). An up and coming house move is going to take up some of the cash I'd have possibly used (before the pension) to live on.

I want the pension to remain invested and I'm not interested in an annuity. I've no intention of putting much money back into the pension other than standard work contributions if I take another job or the limit if not working, so I'm happy to start taking money from it. I don't need a lump sum so I'm thinking of just taking small chunks as and when rather than a regular drawdown.

I'm guessing the only difference between these is one is a manual process and the other is an automated regular one? I think I prefer the manual process as I can make decision on what to take and when (eg. I can take a full years worth of income at once and put it into an ISA/savings). I can also decide not to take it or take a smaller amount I were to get another job.

Anyway, interested to hear your decisions and thought process behind them.
Click to expand...
My wife and I retired at 56. We had 2 smallish DB schemes between us and I had 3 different DC pots.
On retiring ( with a good idea of how much we needed each year) we took both DB pensions using the tax free lump sum on the wife's plus the monthly income from both to see us through first year. This allowed us to confirm budget.
I then, at age 57, took 2 of my pots and bought a 10 year fixed annuity thereby guaranteeing our income at desired level until state pensions kick in.

The final pot was split in half ( hedging bets😉) with half put in a Vanguard drawdown account. Didn't touch it until needed a lump sum to change car. Took out the amount needed tax free thereby crystallizing 3 times this amount that I know draw out monthly for the ' treat / holiday ' fund.

Worked out well because I bought the annuity just before COVID/ Truss / Ukraine periods
 
Shack said:
Those of you that retired early, what did you choose to do with your private pension when you accessed it? Did you take a tax free lump sum? Did you leave that and instead take a tax free element on smaller withdrawals? Did you just take out as and when you needed cash or go into regular monthly drawdowns? Perhaps you took out an annuity.

I'm probably going to start accessing mine after past few years of living off ISA cash and job income (where I'd worked short term). An up and coming house move is going to take up some of the cash I'd have possibly used (before the pension) to live on.

I want the pension to remain invested and I'm not interested in an annuity. I've no intention of putting much money back into the pension other than standard work contributions if I take another job or the limit if not working, so I'm happy to start taking money from it. I don't need a lump sum so I'm thinking of just taking small chunks as and when rather than a regular drawdown.

I'm guessing the only difference between these is one is a manual process and the other is an automated regular one? I think I prefer the manual process as I can make decision on what to take and when (eg. I can take a full years worth of income at once and put it into an ISA/savings). I can also decide not to take it or take a smaller amount I were to get another job.

Anyway, interested to hear your decisions and thought process behind them.
Click to expand...
Unless you need the tax free lump sum to pay off a mortgage etc, then I personally would not take the maximum in one go as you are taking it out of a tax shelter and unless you then put it into an ISA (can only put 20k per year) you will have to pay tax on subsequent interest/dividends/capital gains

When I retired in January I moved a proportion of my pension (80K) into drawdown. This meant that I received 20k (25%) of this as a tax fee sum which I put into my ISA.

For the new tax year that started in April 2024 I have a £12570 tax free personal allowance, so I am withdrawing just over 1k per month from my drawdown pension account so that I don't pay any tax on this money either. This 1k is automated and paid at the end of each month just like a salary by my pension provider.

The rest of the money that I need to live on above the annual 12.5k that I take from my pension comes from ISAs/savings premium bonds.

In future years I can move another 80k from my pension into drawdown taking the tax free 20K lump sum and reinvest this into an ISA when the ISA allowance is refreshed in the next tax year.

My plan is that I will not pay a penny more income tax until I start to receive my state pension.
 
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