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Retirement

Darlo1973 said:
The main con is that if the pension lump sum was, say, £100,000 (to make it a round number) then apart from your ISA allowance and maybe filling up on Premium Bonds then the income from the rest of it would be taxed in a general savings or investment account.

Of course you could take the lump, buy a new car or spend it on a world tour.
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Pull the pin in March then you can use 2 years ISA allowances in quick succession for £40k, £50k into premium bonds. Then as a pensioner you'll not be paying tax on the first £1,000 of interest income, so that's another £20k of savings you don't need to worry about.

Then double all of those if you're married (and not retiring on similar DB schemes at the same time).

Then anything left over you can jam into short dated, low coupon UK gilts and not pay any tax on the (inevitable) capital gains on them.
 

Darlo1973 said:
The main con is that if the pension lump sum was, say, £100,000 (to make it a round number) then apart from your ISA allowance and maybe filling up on Premium Bonds then the income from the rest of it would be taxed in a general savings or investment account.

Of course you could take the lump, buy a new car or spend it on a world tour.
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But you don't need to take the tax free lump in one go. Take it in steps provided your provider allows it.
 
Pop said:
Who is your pension company?

Pension administrators/actuaries/management companies don’t change your scheme, your employer does.
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USS (University Superannuation Scheme), so it is not as straight forward as just my employer, it is a nationally negotiated thing that is public sector linked. I have maintained the same pension through my last 3 jobs (all in HE).
 
Darlo1973 said:
The main con is that if the pension lump sum was, say, £100,000 (to make it a round number) then apart from your ISA allowance and maybe filling up on Premium Bonds then the income from the rest of it would be taxed in a general savings or investment account.

Of course you could take the lump, buy a new car or spend it on a world tour.
Click to expand...

Fair enough, all depends on individual circumstances. £100k, if there's no other significant savings, probably manageable by lumping £20k in ISA 1st & 2nd year and managing the rest through taxable savings and investments accounts with the interest/CGT/dividend allowances. Or premium bonds if that is an option.

But there's no single answer, everyone is different.
 
DaveH said:
But the other side of that is that if you say get £5k less per year, you get £5k less per year. Would you want to sit at home worrying about the heating bill and wishing you could go away for a cheap holiday, knowing you will have got more out of the scheme by the time you are 88 by going early?

The approach I'm taking is deciding on how much I need to live on and that is an eye opener in itself. Going from my salary to my pension income is a large downward jump and sounds a bit frightening. But when I look at my take home pay after tax and pension, I lose quite a bit there. Then with mortgage overpayments, that is another chunk gone. If I take off what I put into savings each month and what I spend on travel to work, I'm starting to get into the realms of what my pension predictions are. I'll need something to top that up going early, but hopefully only have a couple of years of mortgage left which gives free money to save. And that is only filling the gap between early retirement and state pension.

And when I'm a pensioner, I shouldn't have two teenagers at home, one of which is at the stage where we can't fill him with food or stop him growing out of all his clothes every 6 months.

It is an exercise I'd recommend anyone doing. Basically take your take home pay and subtract all the stuff you will not be paying out for, saving or investing. For me that is coming out just over a third of my salary figure.
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We have very similar interests and carreer paths in the same industry, if you're based in NE our paths will probably have crossed - all the best on retirement
 
DaveH said:
Surely it depends on what you do and what stage of your career you are at.

When I was young, I was a network techy. I spent a lot of my day problem solving, writing bespoke bits of code to solve it and generally getting to 'play' with big computer systems. I loved it.

But over the years things have changed. The support environment has changed to be more structured and less of the just hack anything custom to keep things working (for very good reason). Then I also reached the stage where I didn't think I was seeing new technical problems. Lots of problems with stupid decisions from management. So moved into management and security management, partly to allow me to fight the stupid decisions, partly for a new challenge and different problems to solve and partly the pay rise to retirement.

Mid 20s, I would not have wanted to retire and could not see why anyone would be desperate to. Now in my late 40s with (just) less than 10 years to go, sitting after a bank holiday weekend having a morning meeting, I'd happily retire now. What I'm doing is interesting and today it is mostly incident response which I quite enjoy. But that vs my own fun projects, the big long list of jobs I need to get done and a guitar riff I need to learn, I'd happily pick the latter.

But if someone has a fun and rewarding job I can see why they might want to continue.
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Yep it will def depend on what you do and absolutely good on anyone who has a job that they enjoy and dont want to retire. A stand by what i said though and clarified in a later post i havnt hated my jobs just i would have quit any one of them in an instant if i didnt need the money.
 
Edinburgh Black Cat said:
Fair enough, all depends on individual circumstances. £100k, if there's no other significant savings, probably manageable by lumping £20k in ISA 1st & 2nd year and managing the rest through taxable savings and investments accounts with the interest/CGT/dividend allowances. Or premium bonds if that is an option.

But there's no single answer, everyone is different.
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Don’t forget that if your income is less than £17570 Pa you get an additional £5k of savings interest allowance
 
stapler said:
I commend your frugality, but I'm not sure it is realistic for general application. I doubt we could survive on £450 a week between us. £450 a month doesn't cover our energy, water and council tax. I'm sure we could make some savings in the first 2 categories. But not enough to feed and clothe ourselves, pay for transport, entertainment and other fun.
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Agreed, our fixed bills are above that figure. OK first world problems I know, but the council tax is almost that alone. 10/10 for being frugal mind.
 
I assumed the person who said they allowed themselves £450-£600 per month was just for pocketmoney/spending money type thing. As others have said, my council tax, gas/elec and water almost amount to £400.
 
TAD said:
I assumed the person who said they allowed themselves £450-£600 per month was just for pocketmoney/spending money type thing. As others have said, my council tax, gas/elec and water almost amount to £400.
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I assumed he didn't live in the UK
Fletch said:
Ignore this if your a final salary DB pension
For those posters with a DC(pot) pension , on retiring have you reduced the risk exposure ? Hoping the missus can retire end of March and hers is mix of 80% and 60% equity but I’m aware markets are very high at moment so unsure whether to switch some so it’s all 60% so less impact if was big dips when retires
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Entirely up to you. I just moved X amount of years into a STMM so I knew I had enough money to last that time regardless of what the markets do and left the rest of my pot in the same funds I had.
Remember though I was just a fitter and never used an IFA so it could all go to 💩:D
 
TAD said:
I assumed the person who said they allowed themselves £450-£600 per month was just for pocketmoney/spending money type thing. As others have said, my council tax, gas/elec and water almost amount to £400.
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Could be. Currently all our wages go into the join account and we give ourselves £300 each a month for personal and fun stuff and that works (though I'd always want more). If I'm to sustain that into retirement, there is £7,200 of income needed before we consider bills, food, etc.
 
TAD said:
I assumed the person who said they allowed themselves £450-£600 per month was just for pocketmoney/spending money type thing. As others have said, my council tax, gas/elec and water almost amount to £400.
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If you live in a small flat on your own, those costs wont be much over £200 pcm. Obviously everyone on here lives in 4 bed detacheds
 
Iamme said:
Retired at 53. Currently pay myself 600 a month and have about 150 left over. Live on 450 a month technically. Savings pays for unexpected bills i.e leaky shower etc.

Why do you need 20 grand a year to live on when retired???

How do you or can you spend that in year?

I have 2 holidays a year. Paid out the 600 a month.
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I do 2 days work and the wife has finished totally. If we both had finished we could easily drop to 1 car and we live remotely . That’s 2 hundred per month just keeping the 2nd car on the road never mind replacing it.
 
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