Options to bridge from early retirement until NHS pension
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Hi Tibbles209, I'm an IFA working for the company recommended by the BMA.
As already highlighted by other posters the key issue for you will be the lifetime allowance. If you work full time and follow a normal career path you will exceed the current limit.
ERRBO is very worthy of your consideration if you are dead set on retiring early. The reason I like it is because is simply brings forward your pension benefits (up to 3 years), it doesn't actually increase the pension payable. The way that the lifetime allowance is assessed is you pension income multiplied by 20. Quite clearly a pension at age 65 is more valuable to you than a pension at age 68 however these two pensions are valued exactly the same for lifetime allowance purposes.
So ERRBO is the only way of funding a pension (and therefore getting tax relief at your highest marginal rate) without giving yourself an increased lifetime allowance value or annual allowance input.
Once caveat with ERRBO is you buy your pension from normal pension age minus up to 3 years. So currently that would be 65 but if state pension age changes then your ERRBO would track upwards in step.
That said most of my clients use ISA's to "bridge the gap". At your age LISA is a must.
From the goals you have stated a possible plan could be to fund your early retirement, use ISA's to fund your retirement from 58-60 & then LISA from 60-65 then ERRBO from 65+.0 -
sleepless_saver wrote: »In Scotland it's now £43000 for higher rate tax. http://www.gov.scot/Topics/Government/Finance/scottishapproach/Scottishincometax2017-18
Dear God, and people vote for this!
Still, the OP won't pay HRT if she's on £44k and also contributing to a DB pension. But soon, perhaps, she will be.Free the dunston one next time too.0 -
Hi Tibbles209, I'm an IFA working for the company recommended by the BMA.
As already highlighted by other posters the key issue for you will be the lifetime allowance. If you work full time and follow a normal career path you will exceed the current limit.
ERRBO is very worthy of your consideration if you are dead set on retiring early. The reason I like it is because is simply brings forward your pension benefits (up to 3 years), it doesn't actually increase the pension payable. The way that the lifetime allowance is assessed is you pension income multiplied by 20. Quite clearly a pension at age 65 is more valuable to you than a pension at age 68 however these two pensions are valued exactly the same for lifetime allowance purposes.
So ERRBO is the only way of funding a pension (and therefore getting tax relief at your highest marginal rate) without giving yourself an increased lifetime allowance value or annual allowance input.
Once caveat with ERRBO is you buy your pension from normal pension age minus up to 3 years. So currently that would be 65 but if state pension age changes then your ERRBO would track upwards in step.
That said most of my clients use ISA's to "bridge the gap". At your age LISA is a must.
From the goals you have stated a possible plan could be to fund your early retirement, use ISA's to fund your retirement from 58-60 & then LISA from 60-65 then ERRBO from 65+.
Are you really?
Interested parties normally need permission to post and I'd expect a disclaimer on your footer explaining your situation.0 -
I'm a GP but I keep an eye here as I'm interested in pensions. If I were you I would invest into an ISA monthly every year, with a global equity fund or a selection of funds.
HL will have a good range of fund selections that you could plug into. Essentially at your age equity funds are the way to go as you have the time to withstand the ups and downs in the markets. If I had taken this advice when I was your age I would be more weathly than I am..0 -
While I agree at this posint a S&S isa nd Lisa later are a good idea (and perhaps a Sipp later- all of these come up against your lack of investing knowledge/experience.
The website mentioned is a good one (look up the articles on compounding returns and pound/cost averaging).
At the age of 27, and many decades before retirement plus a DB pension- i'd go 100% equities at this point. And a low cost global tracker.0
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