Retirement

[Matt Hopkins]

I'll not lie, I don't understand private pensions (I think that's what a sipp is) so I need to get some advice on this. All my pensions are government final or average salary. and I also need to seek advice about if it's worth maximising additional payments in them

Think the general consensus would seem to be if you're paying tax on your earnings at 40% but when you take pension you'll be taking it at 20% then it's a no brainer. Not 100% on how Govt pensions work but can you not take it at 60 anyway at a reduced rate?

 

[TAD]

Think the general consensus would seem to be if you're paying tax on your earnings at 40% but when you take pension you'll be taking it at 20% then it's a no brainer. Not 100% on how Govt pensions work but can you not take it at 60 anyway at a reduced rate?

I'm just in the normal tax bracket. You can take pension early but loose quite a bit, again something I need to look into...too many options .

 

[Town End Farmer Giles]

I'm just in the normal tax bracket. You can take pension early but loose quite a bit, again something I need to look into...too many options .

Any sort of calculator on your pension fund website? I can plug a date and expected salary into mine and it tells me the numbers

 

[42]

I'll not lie, I don't understand private pensions (I think that's what a sipp is) so I need to get some advice on this. All my pensions are government final or average salary. and I also need to seek advice about if it's worth maximising additional payments in them

In terms of stock market investments, the you'd be investing in the same/similar funds with pensions & ISA's, the key differences are them having different tax wrappers & various restrictions.
Isa is the simplest, you put the money in & can take it out when you want & don't have to worry about tax.

Pensions, you get a tax deduction when you pay in, but becomes taxable when you withdraw. But you can withdraw 25% tax free. Also there's age restrictions as to when you have access.

Since you already have a public sector DB pension (which I'm assuming will be larger than the personal tax allowance) and a basic rate taxpayer, the key difference for you is that deciding if the effective 5% tax benefit on pension from the lump sum Is worth trading for the greater flexibility of the ISA.
Also if you have access to any workplace pension AVC that offer salary sacrifice, you'd click a bit more from NI savings

 

[TAD]

In terms of stock market investments, the you'd be investing in the same/similar funds with pensions & ISA's, the key differences are them having different tax wrappers & various restrictions.
Isa is the simplest, you put the money in & can take it out when you want & don't have to worry about tax.

Pensions, you get a tax deduction when you pay in, but becomes taxable when you withdraw. But you can withdraw 25% tax free. Also there's age restrictions as to when you have access.

Since you already have a public sector DB pension (which I'm assuming will be larger than the personal tax allowance) and a basic rate taxpayer, the key difference for you is that deciding if the effective 5% tax benefit on pension from the lump sum Is worth trading for the greater flexibility of the ISA.
Also if you have access to any workplace pension AVC that offer salary sacrifice, you'd click a bit more from NI savings

Thank you for taking the time to write all that....really helpful. Yes I can do avcs, and there are also two other ways to boost your pension. Need to investigate
Might slip it in an ISA for this year and have a think /get some advice for after April. We fine at state pension age it's just bridging that 7 year gap. Weve started living on one wage so if that works it should be doable. Quite happy to temp at 60 but don't want to be tied as want to travel . Again thanks.

 

[houghton cut head]

If you’ve got enough, open one this side of April 5th then you can do another from April 6th in the new tax year.

Same with pensions, get it in before April 5th to affect this tax year and reduce your 23-24 tax bill if applicable.

Im down to 20% tax bracket now

 

[dangermows]

For those who are anti early retirement to pick apart.

You must be logged on to see media items

 

[Ned Land]

Thank you for taking the time to write all that....really helpful. Yes I can do avcs, and there are also two other ways to boost your pension. Need to investigate
Might slip it in an ISA for this year and have a think /get some advice for after April. We fine at state pension age it's just bridging that 7 year gap. Weve started living on one wage so if that works it should be doable. Quite happy to temp at 60 but don't want to be tied as want to travel . Again thanks.

I’m also planning to bridge a 7 year gap.

At 60 I plan to retire from a DB/career average scheme.

I also invest into AVCs and a SIPP.

The aim is to have a lump sum to cover 3-4 years at least, then I’ll deplete the SIPP until the state pension kicks in.

Or I might croak when I’m 59 …

 

[DaveH]

For those who are anti early retirement to pick apart.

You must be logged on to see media items

Canny, but shows why I don't like video format. He says in 11 minutes what someone else could say with 5 bullet points. Most other videos are the same.

If people think some of my posts are long and rambling, thank god I have never gone into video. I'd challenge The Hobbit for hours of stuff with nowt actually happening.

I’m also planning to bridge a 7 year gap.

At 60 I plan to retire from a DB/career average scheme.

I also invest into AVCs and a SIPP.

The aim is to have a lump sum to cover 3-4 years at least, then I’ll deplete the SIPP until the state pension kicks in.

Or I might croak when I’m 59 …

How long until you are 60?

 

[Town End Farmer Giles]

I’m also planning to bridge a 7 year gap.

At 60 I plan to retire from a DB/career average scheme.

I also invest into AVCs and a SIPP.

The aim is to have a lump sum to cover 3-4 years at least, then I’ll deplete the SIPP until the state pension kicks in.

Or I might croak when I’m 59 …

Probably gonna retire at 57/58 so 10 years or so to cover. I'll just drain the lump sum to top up the pension until state pension kicks in. Don't have an extravagant life, holidays are nowt fancy, but hopefully more of them.

If I run out of money at 65 it means I've had a bloody good 7 or 8 years.

 

[Ned Land]

Canny, but shows why I don't like video format. He says in 11 minutes what someone else could say with 5 bullet points. Most other videos are the same.

If people think some of my posts are long and rambling, thank god I have never gone into video. I'd challenge The Hobbit for hours of stuff with nowt actually happening.

How long until you are 60?

8.5 years m8

 

[natinnam]

Canny, but shows why I don't like video format. He says in 11 minutes what someone else could say with 5 bullet points. Most other videos are the same.

If people think some of my posts are long and rambling, thank god I have never gone into video. I'd challenge The Hobbit for hours of stuff with nowt actually happening.

How long until you are 60?

Yeah, watched that and he doesn't really say anything other than what common sense tells you anyway. Mortgage free I assume with military/police pensions, he'll have enough to get by, zero details to make anyone think, shit I could manage that!

 

[moanjam]

Probably gonna retire at 57/58 so 10 years or so to cover. I'll just drain the lump sum to top up the pension until state pension kicks in. Don't have an extravagant life, holidays are nowt fancy, but hopefully more of them.

If I run out of money at 65 it means I've had a bloody good 7 or 8 years.

This is me but I'm 53, I had 58 as a definite pencilled in but waiting on if theirs any changes to state pension which is looking more and more likely so probably going to be 59/60 if I don't get state pension at 67. They reckon as a rule of thumb that if you're within 10 yrs of your state pension they won't alter your retirement age.

 

[Hair Flick]

Yeah, watched that and he doesn't really say anything other than what common sense tells you anyway. Mortgage free I assume with military/police pensions, he'll have enough to get by, zero details to make anyone think, shit I could manage that!

He was engaging enough to start but then went on & on without really moving the conversation past stating the pretty obvious.

I’m assuming his forces and police pension are canny, given he turned down the option of a “huge lump sum” and will be index linked? He doesn’t really explore how someone in a non-DB scheme which is geared up for early retirement could plan to retire at 50. Fact is most couldn’t unless they’d hoyed shed loads in to their DC pensions from an early start.

Good luck to him all the same, it looks like he’s had a pretty rough paper round.

 

[DaveH]

8.5 years m8

Nice. I've got a similar plan but just over 13 years for me. I might be able to drop to a fairly basic job at 58 and not save but not need savings either. Perhaps part time. Still a long way to go....

 

[dangermows]

Yeah, watched that and he doesn't really say anything other than what common sense tells you anyway. Mortgage free I assume with military/police pensions, he'll have enough to get by, zero details to make anyone think, shit I could manage that!

Was more for those who say retirement will be crap, boring, repetitive (unlike work) and you'd want to be back to work in no time.

 

[DaveH]

Yeah, watched that and he doesn't really say anything other than what common sense tells you anyway. Mortgage free I assume with military/police pensions, he'll have enough to get by, zero details to make anyone think, shit I could manage that!

That is the key, being mortgage free. I was planning on being free at 50 and falling a little short. Interest rate rises says about 51.5 now. I might be able to knock that down a bit, but retiring with a mortgage is not going to happen.

I don't know if the bloke has kids. When I'm 50, my kids will be 20 and 16, so I'll still be funding them.

Like you say, with a military and police pension (which I know are very good at 50), then I can see how he does it.

The key bit he said was find a hobby and find something to do. I'm good at that and keep picking up ideas. I've always loved woodwork and the natural beauty of wood, and I'm a guitar player, playing more in recent years than I have ever done. And I've spent the last few days watching videos about guitar building from scratch. But with that comes expensive chunks of wood, if you want decent tools, that is expensive.

I'd rather work a couple more years and have the cash to afford hobbies like that, than having all the time but not the money and wishing I could have decent woodworking tools etc.

 

[Town End Farmer Giles]

This is me but I'm 53, I had 58 as a definite pencilled in but waiting on if theirs any changes to state pension which is looking more and more likely so probably going to be 59/60 if I don't get state pension at 67. They reckon as a rule of thumb that if you're within 10 yrs of your state pension they won't alter your retirement age.

I had always thought 60, maybe 62. But a heart attack made me rethink it, 57 is a bit early financially but I'd rather retire sooner and risk running short of cash than risk retiring later and being too unwell to enjoy it.

Cash is easier to plan for than time.

 

[moanjam]

I had always thought 60, maybe 62. But a heart attack made me rethink it, 57 is a bit early financially but I'd rather retire sooner and risk running short of cash than risk retiring later and being too unwell to enjoy it.

Cash is easier to plan for than time.

Definitely mate hope you stay fit

 

[Butcher's Coat]

Love retirement me like.
If you get the chance - do it.
It's not a dress rehearsal - we only get one go at life. Enjoy it.