Retirement

[Mr B]

Earlier this week I maxed out this years ISA and put everything in place to start taking my private pension as drawdown when I need it. I sat down with a cup of tea and at first I was relieved it was all sorted but then suddenly became all depressed thinking this is it, my usefulness to society has ended, I'm now just another pensioner waiting to die.
A couple of beers later and I was feeling better. I've never worked since December but have agreed to do 3 days next week and will continue to do the odd days when needed if they suit me. Being depressed for those couple of hours took me completely by surprise, I thought I'd be over the moon at getting retirement sorted.
Anyone else get depressed realising their working life was over?

Was lucky enough to take early retirement 10 years ago. Was a bit worried at first in case I got bored, but must admit I’ve not missed work once. I get up when I want, go to bed when I want, basically do whatever I want, whenever I want and don’t have to be governed by the clock. Hobbies and grandchildren keep me occupied and I always knew that if I really missed going to work, I could always look for a bit of part time work. Luckily there’s never been a need for that.

 

[Matt Hopkins]

Okay I knew 30k of a redundancy payment was tax free but you're saying the remainder cannot be classed as relevant earnings for that year?
Let's say I get laid off in mid-April and receive a redundancy of 70k, my relevant earnings for the year are next to zilch because we are still in April.
What can I do with the taxable portion of the 70k?

I was talking about using pension carry forward allowance.
In your case you could use the £40k as relevant earnings for the tax year in which you receive it.
If you are going to use for carry forward allowance then look at my example
Hope that makes sense As ever I'm not an IFA

Once you are retired can you still add to your pension and still get the tax relief when contributing

If you ONLY get pension payments then you can put in £2880 which will be topped up to £3600 until you are 75 then the tax relief stops

 

[Copacabana]

I was talking about using pension carry forward allowance.
In your case you could use the £40k as relevant earnings for the tax year in which you receive it.
If you are going to use for carry forward allowance then look at my example
Hope that makes sense As ever I'm not an IFA

If you ONLY get pension payments then you can put in £2880 which will be topped up to £3600 until you are 75 then the tax relief stops

Thanks

 

[NYMackem]

It really isn't that easy and the carried forward allowance is only 3 years. You need to be earning over £60k for a start and you can only put in up to your relevant earnings.

As an example say you earn £40k for 3 years and make pension payments of £10k/ year. You then have a windfall of £80k and decide to put it in your pension. The most you can put in is £40k, you have no carry forward allowance (Ignoring all tax relief) For you to use carry forward you would need a to change jobs and find one that pays £80k if you wanted to put £80k in.

It probably isn't possible unless you are in the position as above

Also just looked at the original post you replied to. He seemed to be suggesting using a redundancy payment to top it up. £30k of redundancy pay is take free they are not relevant earnings so can't be used as a pension contribution either

I meant easy to calculate, not easy to earn enough money to take advantage of it.

The person I replied to was replying to someone talking about getting a years pay as redundancy in the last quarter if the tax year, so not a normal year's earnings.

Also, this year plus previous three years = last 4 years.

 

[JAZZMANB]

As an example say you earn £40k for 3 years and make pension payments of £10k/ year. You then have a windfall of £80k and decide to put it in your pension. The most you can put in is £40k, you have no carry forward allowance (Ignoring all tax relief) For you to use carry forward you would need a to change jobs and find one that pays £80k if you wanted to put £80k

so you haven't got 3 years at 30k a year to use up? ( 40k less 10k)

 

[Matt Hopkins]

so you haven't got 3 years at 30k a year to use up? ( 40k less 10k)

Nope.

I meant easy to calculate, not easy to earn enough money to take advantage of it.

The person I replied to was replying to someone talking about getting a years pay as redundancy in the last quarter if the tax year, so not a normal year's earnings.

Also, this year plus previous three years = last 4 years.

Fair enough maybe I should have said its more nuanced than that

 

[JAZZMANB]

Nope.

Fair enough maybe I should have said its more nuanced than that

I get you ,it Maxs at your present salary

 

[ozz]

Tax free is capped at £30k, I believe.

i always thought it was £30k- should have actually increased with inflation, taxation etc.

 

[bozwellboyce]

I didn't know this was possible. I'm guessing you have to take into account your relevant earnings from those last 4 years, deduct what you have already put in and then Bobs your uncle? TIA for any advice on this matter

That's exactly it. If the allowance for that year was £40k and you put in say £10k, you have £30k you can add, that applies for the current year and previous 3. The new rate being £60k per year.

It really isn't that easy and the carried forward allowance is only 3 years. You need to be earning over £60k for a start and you can only put in up to your relevant earnings.

As an example say you earn £40k for 3 years and make pension payments of £10k/ year. You then have a windfall of £80k and decide to put it in your pension. The most you can put in is £40k, you have no carry forward allowance (Ignoring all tax relief) For you to use carry forward you would need a to change jobs and find one that pays £80k if you wanted to put £80k in.

It probably isn't possible unless you are in the position as above

Also just looked at the original post you replied to. He seemed to be suggesting using a redundancy payment to top it up. £30k of redundancy pay is take free they are not relevant earnings so can't be used as a pension contribution either

When I took vol redundancy, this is exactly what I did, carefully guided by IFA, Accountant and Solicitor. At the time it was £40k max, my then company paid in an amount based on the delta of what I had paid in pensions including annual bonus and remainder of £40k for the prev 3 yrs and current year. It was a tidy amount, very easy and straight forward and came directly from redundancy pot (not the part which was tax free) via sal sacrifice and benefitting from tax relief, straight into pension pot.

 

[Generic Mackem]

Hello retirement folk, I'm a regular poster but the Mods have let me have an alias for this post as will become clear I don't want to say who I really am on here. I've followed this thread as I'm 60, have saved regularly into the pension pot, and suddenly I seem to have a lot. Like, a lot. £750k. Sorry, I'm not trying to show off, and one of the reasons it's so big is we never had kids (which was a big sadness, but when it didn't happen I've always seen it like 'oh well, put that money into the pension instead') - so I guess I'm trying to say my life hasn't been perfect or always gone to plan.

Anyways, I always forgot about the pension, put money in and thought 'that's for years away, forget about it', and suddenly it's here and it's mine and I can take it and it's a lot. I know this is literally the embarrassment of riches but I don't know what to do. Throughout not having kids we've always said 'we've only ourselves to please, so let's go for it'.

I'm still working, about 3-4 days a week (consultancy) and it's not great but OK. I think I could stop now if I wanted to and have enough to see me out. The mortgage is paid off.

So I guess my question is: what would you do if you were me?

 

[peachy]

What do you like doing?

 

[Generic Mackem]

What do you like doing?

I genuinely don’t know. We’ve had a great life with all the travel, treats, luxuries etc we’ve wanted, although our tastes are modest eg Tenerife is fine for holidays, we’ve no interest in travelling the world.

 

[Will e]

So I guess my question is: what would you do if you were me?

Hobbies? Interests? Bucket list? Anything like that?

 

[Generic Mackem]

Hobbies? Interests? Bucket list? Anything like that?

Nowt really. I’ve been happy (genuinely) rattling along. This is what I need to work out and it feels massive!

 

[gizmoganzee]

Hello retirement folk, I'm a regular poster but the Mods have let me have an alias for this post as will become clear I don't want to say who I really am on here. I've followed this thread as I'm 60, have saved regularly into the pension pot, and suddenly I seem to have a lot. Like, a lot. £750k. Sorry, I'm not trying to show off, and one of the reasons it's so big is we never had kids (which was a big sadness, but when it didn't happen I've always seen it like 'oh well, put that money into the pension instead') - so I guess I'm trying to say my life hasn't been perfect or always gone to plan.

Anyways, I always forgot about the pension, put money in and thought 'that's for years away, forget about it', and suddenly it's here and it's mine and I can take it and it's a lot. I know this is literally the embarrassment of riches but I don't know what to do. Throughout not having kids we've always said 'we've only ourselves to please, so let's go for it'.

I'm still working, about 3-4 days a week (consultancy) and it's not great but OK. I think I could stop now if I wanted to and have enough to see me out. The mortgage is paid off.

So I guess my question is: what would you do if you were me?

Is this a woosh.

 

[peachy]

I'd say keep busy. There can't be much worse than waiting for the end doing nothing.

With money your keeping busy can cost from nothing, to having the money to help you keep busy.

If you are into fitness and health you could pay for the best gym.

You could
Paint.
Eat in a different restaurant every week.
Buy nice transport.
Volunteer.
Help out at a children's hospital, a pet centre, an old person's home, a care centre.
Learn a new hobby every year.
Write a book.
Cook.
Get financial advice??
Teach yourself about finance.
Make things.

Looking after yourself in old(er) age is probably more important than having lots of money. Having lots of money will help you if needed though.
Be a gran to a family who don't have a grandparent figure.
Become a market trader.
Climb a tree.
Become a mentor.
Become a teacher.
Play a new music instrument.

Try travelling, there is s lot more to the world than Tenerife.
You can do it in comfort or have more fun and do it on a budget.

 

[Will e]

Nowt really. I’ve been happy (genuinely) rattling along. This is what I need to work out and it feels massive!

I'd stop consulting NOW. and plan your retirement, nothing that interests you or your missus, it doesn't have to cost money, nothing you's fancy trying. Need to spend time thinking about life from hear on.

 

[archiesdad]

2 weeks to go for me. I've just contacted my old DB pension provider to start access from April. I'll use up some cash for a few mths until I decide an exact drawdown plan. The Mrs is leaving work eng of April so we should be in for a chilled out summer. Nee idea what I'm going to do to keep occupied but looking forward to figure it out

 

[Generic Mackem]

I'd stop consulting NOW. and plan your retirement, nothing that interests you or your missus, it doesn't have to cost money, nothing you's fancy trying. Need to spend time thinking about life from hear on.

I think that’s it. We need to get our heads round it and that’s going to take time.

 

[Generic Mackem]

I'd say keep busy. There can't be much worse than waiting for the end doing nothing.

With money your keeping busy can cost from nothing, to having the money to help you keep busy.

If you are into fitness and health you could pay for the best gym.

You could
Paint.
Eat in a different restaurant every week.
Buy nice transport.
Volunteer.
Help out at a children's hospital, a pet centre, an old person's home, a care centre.
Learn a new hobby every year.
Write a book.
Cook.
Get financial advice??
Teach yourself about finance.
Make things.

Looking after yourself in old(er) age is probably more important than having lots of money. Having lots of money will help you if needed though.
Be a gran to a family who don't have a grandparent figure.
Become a market trader.
Climb a tree.
Become a mentor.
Become a teacher.
Play a new music instrument.

Try travelling, there is s lot more to the world than Tenerife.
You can do it in comfort or have more fun and do it on a budget.

Thank you. I like “climb a tree” from that! Cos I know what you’re saying- be a bit spontaneous and childlike