Another sanity check
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Pensions_matter_2
Posts: 100 Forumite
Hello,
New to this. Have benefited a huge amount from reading these posts. Sanity check appreciated as to whether being too optimistic about retiring comfortably in near future - 56 with DB pension £18500 at 60 (limited indexation) plus £300k in DC pot (considering annuity at 60 as not a confident investor). Will get full SP if continue to 60. No mortgage or debt. Realistically ok with £25k pa but not sure possible. Should I wait another year or two to build up more? Not sure how best to take it all.
Thanks
New to this. Have benefited a huge amount from reading these posts. Sanity check appreciated as to whether being too optimistic about retiring comfortably in near future - 56 with DB pension £18500 at 60 (limited indexation) plus £300k in DC pot (considering annuity at 60 as not a confident investor). Will get full SP if continue to 60. No mortgage or debt. Realistically ok with £25k pa but not sure possible. Should I wait another year or two to build up more? Not sure how best to take it all.
Thanks
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Comments
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Well if you are getting 18.k out of your DB pension at 60 then you are 6.5k short of your 25 target. Even if you used the 300k DC pot as a drawdown then at 6.5k per year you get 46 years out of it, even at 10k per year you get 30 years to zero (not accounting for inlfation or interest).
Questions are, are you happy depleting pot to zero or were you hoping to maintain it to pass on? How much can you reasonably expect to pad it out in a year? Only you can answer this but why not two more years?, why not go till 65?
There is never a 100% clear outcome, you may prefer the certainty of a annuity to drawdown. You just have to sit down and think it through.0 -
Well if you are getting 18.k out of your DB pension at 60 then you are 6.5k short of your 25 target. Even if you used the 300k DC pot as a drawdown then at 6.5k per year you get 46 years out of it, even at 10k per year you get 30 years to zero (not accounting for inlfation or interest).
Questions are, are you happy depleting pot to zero or were you hoping to maintain it to pass on? How much can you reasonably expect to pad it out in a year? Only you can answer this but why not two more years?, why not go till 65?
There is never a 100% clear outcome, you may prefer the certainty of a annuity to drawdown. You just have to sit down and think it through.
why you factoring in drawdown from the pot beyond Sp age ? They would need to take only 7×5=35 k. There is 3OO k in the pot.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
I am a simple man I like simple maths.
Point conceded but we are at wet finger in the air level here.0 -
Thanks very much for replies. I should have made clear I am thinking of retiring in near future, as in within the year, but worry about making the jump. I'd like to keep a lump sum from pension to cover one off costs, so that will mean £225k left. As you say I need to think it through, but want to make sure I'm on the right track. Appreciate your input.
Thanks0 -
plus £300k in DC pot (considering annuity at 60 as not a confident investor).
Drawdown would give more flexibility as you could fund the gap from the pension and then reduce the draw when state pension is due.
Everything has risks. Including annuity. It is about taking the right risks.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Presumably you are thinking of leaving your occupational pension deferred until Scheme Pension Age and taking an income from your DC Scheme?
Have you obtained a State Pension Forecast?
https://www.gov.uk/check-state-pension
If your occupational pension was contracted out (likely) then it may be that you do not have a full NSP and will wish to consider voluntary contributions.
You might consider both an annuity and drawdown with your DC scheme?
https://www.pensionwise.gov.uk/en/appointments
Might you find a discussion with Pension Wise helpful?0 -
Don't forget to take your state pension (get a forecast) into consideration when making your calculations. If in doubt you might want to consider working for another year as generally speaking once you leave you are unlikely to get the same salary if you subsequently need an income top up.0
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Thanks again for replies. Yes, having read through many threads on here, I was thinking it best to defer taking DB pension till 60, and I understand my state pension is about £7500 and I need a few more years to make it up to full amount. If I can pay in extra to buy more years I will do that. Work has become too demanding and stressfulll, hence why thinking of retiring. May be going part time is the answer.
Thanks0 -
Thanks dunstonh and xylophone, I'll have another think about drawdown, may be combined with annuity. May consider another year, as newatc suggests.
Appreciate all your input.0 -
and I understand my state pension is about £7500 and I need a few more years to make it up to full amount.
Below may be worth a look if you need to consider voluntary contributions.
https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf0
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