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Retirement

Shambo said:
isn't just putting the max you can into your work based pension scheme the best thing as you save the tax & NI?

I have 1 ISA S&S with a small number in and I am going to have to spend it soon as my house has no guttering and I would quite like that before autumn!
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All depends on if you are gonna need access or not. Imagine you didn't have that small amount in your ISA, how would you pay for your gutters? You couldn't take it from your pension, could you?
 

Copacabana said:
All depends on if you are gonna need access or not. Imagine you didn't have that small amount in your ISA, how would you pay for your gutters? You couldn't take it from your pension, could you?
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ah right I get what you mean. yeah, I think having a small amount you can grab anytime you want is very sensible move.
 
Shambo said:
ah right I get what you mean. yeah, I think having a small amount you can grab anytime you want is very sensible move.
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Having 3-6 months living expenses available is generally recommended in case in you lose your job or are unable to work. Especially important as you get older as living costs increase and it can be harder to get a new job in your 50s and early 60s.
 
Shambo said:
so you could ask your pension company to pay you a monthly amount so it continues feeling like a salary? I live a somewhat chaotic life and that definitely appeals to me, though i do appreciate taking an annual lump sum means you can invest the years money into an ISA maybe and then use that as your money for the year, getting a return along the way
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Yes, you can choose the amount you want to drawdown each month from your SIPP/personal/work pension (assuming you don’t have a defined benefit/final salary pension), and the pension provider ‘pays’ you this amount direct to your bank and also sorts out your tax code with HMRC, just like an employer.
For example I get ‘paid’ £1047.50 per month from my pension provider. I chose this amount as it is equivalent to £12570 per year so I don’t pay any income tax. I could take more, but don’t want to be taxed. I make up the rest of what I need to live on from my ISAs and from the 25% tax free lump sum.
 
Shambo said:
so you could ask your pension company to pay you a monthly amount so it continues feeling like a salary? I live a somewhat chaotic life and that definitely appeals to me, though i do appreciate taking an annual lump sum means you can invest the years money into an ISA maybe and then use that as your money for the year, getting a return along the way

I went to see an IFA earlier in the week and was put off by them wanting £500 to give me advice. I then learned yesterday that everyone is entitled to withdraw £500 (amazing coincidence!) from their private pension a max 3 times in their to be used only for paying an IFA for advice
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Please don't take this the wrong way.
You don't seem to have much idea on how the basic mechanics of pensions work. If I was you there is no way I'd be paying an IFA £500 or any amount to explain the basics, all the information is out there.

This is a start
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Do a bit reading and then maybe come back here and ask any questions? I'm not saying there are experts on here, and nobody can give advice, but there are a few knowledgeable people who could point you in the right direction. It might prepare you a bit better before you see an IFA, as they say time is money.
Barista said:
Yes, you can choose the amount you want to drawdown each month from your SIPP/personal/work pension (assuming you don’t have a defined benefit/final salary pension), and the pension provider ‘pays’ you this amount direct to your bank and also sorts out your tax code with HMRC, just like an employer.
For example I get ‘paid’ £1047.50 per month from my pension provider. I chose this amount as it is equivalent to £12570 per year so I don’t pay any income tax. I could take more, but don’t want to be taxed. I make up the rest of what I need to live on from my ISAs and from the 25% tax free lump sum.
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This lad/lass knows the crack 👍
 
Shambo said:
yeah I am starting to get this mindset tbh. I have a funny mortgage situation so I am not looking to pay it off, but am looking to just maximise my monthly pension contributions

I was paying in a combined 10% last summer when I started looking into it all, then upped it to 13%, then 16%, and then yesterday made that 18%. Will give it a few months there to see how affordable it is but my main aim is to take that to 20%.

I also feel bad as I am the only full time earner at home so any extra money I put into my pension is money I take away from my family.
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I don't know if this will help you but looking at my own position, which is end of career, 85% of my savings are in my pension funds and 15% are in cash, ISAs etc. I don't know if people would recommend looking at it this way. Certainly I didn't save 85% to pension, 15% to other things except maybe in the last ten years or so. When you're younger, you need more readies for guttering and living a bit of the good life. But this is how it's ended up. I never really strategised about any of this, I just figured out how much of a cushion in readies I needed, got to that, maintained it, and the rest went into pension.
 
Shambo said:
isn't just putting the max you can into your work based pension scheme the best thing as you save the tax & NI?

I have 1 ISA S&S with a small number in and I am going to have to spend it soon as my house has no guttering and I would quite like that before autumn!
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Only save on NI if its salary sacrifice & not all schemes are eligible.

Then when you draw your pension, you then you just pay the tax back (well 75% of it on income above the personal allowance if youre a standard rate payer, and state pension is currently not far off PA)
 
Apologies if already covered have tried to look through the thread but cant find answer. Looking to take out 25% tax free at 55 next year and i am under the impression at that point i will need to decide what to do with the rest. Drawdown would be best for me (i think) but i will still be working. Question is, what would be the minimum i can take out under drawdown as would like to keep the remainder invested. What is the 4% rule? Appreciate any advice
JOEJA said:
Apologies if already covered have tried to look through the thread but cant find answer. Looking to take out 25% tax free at 55 next year and i am under the impression at that point i will need to decide what to do with the rest. Drawdown would be best for me (i think) but i will still be working. Question is, what would be the minimum i can take out under drawdown as would like to keep the remainder invested. What is the 4% rule? Appreciate any info
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You can take the 25% tax free without taking anything else. Be careful that you don't take 1penny out of your taxable pot as you'll trigger the MPAA and will only be able to put £10k max pa into your pension in tbe future.
If its a work pension and you're still paying in you may not even be allowed to do that.
The 4% rule isn't actually a rule it goes something like if you take 4% of your pot each year over 30 years you won't run out of money. There loads of stuff about it on the net.
 
Matt Hopkins said:
You can take the 25% tax free without taking anything else. Be careful that you don't take 1penny out of your taxable pot as you'll trigger the MPAA and will only be able to put £10k max pa into your pension in tbe future.
If its a work pension and you're still paying in you may not even be allowed to do that.
The 4% rule isn't actually a rule it goes something like if you take 4% of your pot each year over 30 years you won't run out of money. There loads of stuff about it on the net.
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Depends on if you want to have some money to leave to family or happy to die penniless. The "4% rule" was designed to maintain your fund but as long as you are happy for it to be depleted over time then it is probably overly cautious
 
Matt Hopkins said:
You can take the 25% tax free without taking anything else. Be careful that you don't take 1penny out of your taxable pot as you'll trigger the MPAA and will only be able to put £10k max pa into your pension in tbe future.
If its a work pension and you're still paying in you may not even be allowed to do that.
The 4% rule isn't actually a rule it goes something like if you take 4% of your pot each year over 30 years you won't run out of money. There loads of stuff about it on the net.
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Thanks appreciate the info. I've had a pensionwise appointment and been looking on net but have ended up more confused as was sure they said as soon as you access the 25% tax free you need to then select an option of what to do with the taxable part which is why i was thinking drawdown as dont fancy the annuity option. Then saw what i though was you had to take out a minimum of 4% which would mean with my current salary i would get hammered with tax. I suppose i will have to get some FA to ensure i am clear but thanks again for info
Darlo1973 said:
Depends on if you want to have some money to leave to family or happy to die penniless. The "4% rule" was designed to maintain your fund but as long as you are happy for it to be depleted over time then it is probably overly cautious
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Understand your point but they will get the house 😉
 
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JOEJA said:
Thanks appreciate the info. I've had a pensionwise appointment and been looking on net but have ended up more confused as was sure they said as soon as you access the 25% tax free you need to then select an option of what to do with the taxable part which is why i was thinking drawdown as dont fancy the annuity option. Then saw what i though was you had to take out a minimum of 4% which would mean with my current salary i would get hammered with tax. I suppose i will have to get some FA to ensure i am clear but thanks again for info

Understand your point but they will get the house 😉
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Yes once you've taken 25% the remainder moves into your drawdown pot but you don't have to take anything out of it straightaway
Darlo1973 said:
Depends on if you want to have some money to leave to family or happy to die penniless. The "4% rule" was designed to maintain your fund but as long as you are happy for it to be depleted over time then it is probably overly cautious
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I don't use it or gave it any thought to be honest when I was sorting my stuff out
 
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