Retirement stages
Comments
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I must admit equity release seems like an expensive option to me, but only in terms of leaving money to kids I guess.
Re SP I was opted out and mine is reduced even though I have contributed a lot more years than my wife who wasn't and will have almost the full amount. That said I am sure she earnt it all those years she spent at home with young children!
Jerry0 -
I was assuming the extra £13k+ you mentioned for SP was post-tax. If it's a pre-tax number because you are thinking that you will get less than the £155.65 then get on and pay some voluntary NICs to get the full amount. It's by far the best value investment available to you unless you have good reason to expect to turn up your tootsies before reaching 70.0
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Yes... They say I will, from 2022, be getting £179 a week.Silvertabby wrote: »Have you requested a State pension forecast? If any of your 4 pensions were contracted out, you may not qualify for the full £155 per week.0 -
Our combined SP is pre tax though my wife wont pay any tax on hers unless I die and she inherits half my final salary pension
From memory when I checked on line mine was about £120/w and hers about £145/w. Pension wise at 66ish we will be well off assuming like I said they don't change the rules again in the next 10 years.
I am leaving next March so no more NI payments for me thanks very much.
Jerry0 -
If you are paying tax in retirement then a year's worth of NICs is a one-off payment of £733 in return for £185.51 A YEAR FOR LIFE post tax. For your wife, a one-off £733 gets her £231.89 a year for life (dropping to £185.51 if you predecease her). Those sums have the same inflation proofing as the rest of your state pension and you would be quite frankly mad not to take them.jerrysimon wrote: »Our combined SP is pre tax though my wife wont pay any tax on hers unless I die and she inherits half my final salary pension
From memory when I checked on line mine was about £120/w and hers about £145/w. Pension wise at 66ish we will be well off assuming like I said they don't change the rules again in the next 10 years.
I am leaving next March so no more NI payments for me thanks very much.
Jerry0 -
Looking at the theory of a U-shaped expenditure curve, I wonder if it would be better to see it as two streams of distinct kinds of expenditure, revenue and capital?
I retired a few months ago, and planned on the basis that I needed to sustain broadly the same level of revenue expenditure as previously. My costs have not diminished appreciably, mainly travel to work, but with more time I want to do more with my leisure. I certainly don't want a lower standard of living. I envisage that continuing indefinitely.
So revenue expenditure throughout retirement would be flat.
But early on there might be a case for capital expenditure, eg using a lump sum, for house improvements, catching up on neglected maintenance, world cruise, sports car, etc .
As for the possibility of later rising costs, that too is better seen as capital. Most people who need care need it only for a few years, and yes, it can make an enormous bite in someone's wealth. But it is essentially unplannable, with a reasonable chance of not being needed. So I don't really see how it fits into a planned rising revenue cost - better perhaps as a contingent capital cost.
Combining the two profiles gives a sort of U-graph, but on a firmer basis I suggest.
Two fundamental factors do occur to me;
One is on the downsizing question. We are in the position of not needing to include the house value in any consideration of pension needs, so probably envisage staying put indefinitely, and passing the house to descendants.
The other is to be clear whether planning is per person or per couple.
My SIPP would pass to my wife if she were to survive me (she is ten years younger) so the income considerations would remain pretty much unchanged. I am drawing down less than the natural income of the SIPP. But obviously circumstances vary, and someone whose widow's pension might only be 50% would face different considerations.0 -
If you are paying tax in retirement then a year's worth of NICs is a one-off payment of £733 in return for £185.51 A YEAR FOR LIFE post tax. For your wife, a one-off £733 gets her £231.89 a year for life (dropping to £185.51 if you predecease her). Those sums have the same inflation proofing as the rest of your state pension and you would be quite frankly mad not to take them.
Hold on I pay around £350/month in NI so you are saying I would only need to pay in one £733 lump sum to get £185 extra a year for life ?
That said I would have to wait to 66.5 to draw it i.e. 10 years away.
Jerry0 -
We had these conversations earlier this year when trying to decide if OH could afford to retire this year. We came to the conclusion that we needed around £1500 per month to live as we do now with access to £100k capital for house maintenance/ car replacement and holidays for next 10 years. OH is 58, I am 56. As you say the most expensive years are early retirement and possibly later years should care costs be needed. We have pensions, savings, OHs TFLS, property and stocks and shares. We have determined not to blow lump sum on big holidays, new cars etc etc but to live as we do now for next few years and confident our finances will allow this.
Whether your plan will work or not depends on your outgoings and your pension pots. Is it worth waiting and only drawing one or two initially until you see how things go?
We are delaying taking my main pension until around 62 (LGPS) as I will be carrying on working for one more year and we will live off my salary and OH pension then savings then a private frozen pension of mine which kicks in at 60. State pensions will subsidise our income probably just as TFLS decreasing.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
That's precisely what I'm saying. Voluntary NICs are insanely good value. If you had £120 pw at April 2016 you'd need 8 more years to get to the full new SP level. You'll get one for this year so that leaves 7 to go. At current prices that would be a little over £5k of capital expenditure to get £1,300 a year post-tax income from 66.5. You could theoretically wait a few years to avoid tying up the money for so long, but I personally plan to pay each year as it comes in case HMRC put the prices up as it just seems too good to last.jerrysimon wrote: »Hold on I pay around £350/month in NI so you are saying I would only need to pay in one £733 lump sum to get £185 extra a year for life ?
That said I would have to wait to 66.5 to draw it i.e. 10 years away.
Jerry0 -
Another way of doing it is paying 2880 into a SIPP - even if you're not paying tax you should get it grossed up to 3600. You can then take 25% Tax Free (25% of 3600 = 900). So you have effectively got your NIC's paid for you .....
Seems daft not to, unless you don't have the money to put into a SIPP or I'm missing something (hopefully not a screw) ....0
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