40 and no pension, where do i start?
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HY Markets is headquartered in London and is authorized and regulated by the Financial Services Authority of the United Kingdom.
Yet you cannot spell authorised and you make a financial promotion that is in breach of FSA guidelines.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 -
For early retirement income drawdown would be the way to go and could reasonably pay 6% of the pot indefinitely, so around £750 a month of which about £250 would be taxed at 20%. Once state pensions start that would rise by around £580 a month before tax assuming reasonably typical contribution record. So with state pensions about £1,164 a month after tax. Once higher personal allowances start from age 65 that income would rise by about £60 a month.If he bought an annuity with his £150k,how much would he get back per month?
I can live on less than that and still pay the rent, a retired person with a paid for home could live a fair bit better on that than I do.
If retiring before state pension age then it may be necessary to draw more than the capital can sustain until the state pensions start, to give a high enough income. Having money invested in ISAs or non-ISA savings also helps.
Starting a good deal after 40 and with lots of commitment and a good income I should be in a position to retire on a liveable but fairly low income before I'm 50. By 55 having around £25,000 of annual income in retirement before the state pensions start looks possible.0 -
For early retirement income drawdown would be the way to go and could reasonably pay 6% of the pot indefinitely, so around £750 a month of which about £250 would be taxed at 20%. Once state pensions start that would rise by around £580 a month before tax assuming reasonably typical contribution record. So with state pensions about £1,164 a month after tax. Once higher personal allowances start from age 65 that income would rise by about £60 a month.
I can live on less than that and still pay the rent, a retired person with a paid for home could live a fair bit better on that than I do.
If retiring before state pension age then it may be necessary to draw more than the capital can sustain until the state pensions start, to give a high enough income. Having money invested in ISAs or non-ISA savings also helps.
Starting a good deal after 40 and with lots of commitment and a good income I should be in a position to retire on a liveable but fairly low income before I'm 50. By 55 having around £25,000 of annual income in retirement before the state pensions start looks possible.
I'm puzzled by what you describe as 'income drawdown'. Surely, a pot of £150k would only generate around 4.5% of this as an annual income (i.e. £6,750 a year). Where did the 6% figure come from? I assume this is based on a flat rate, level pension, with no indexation.0 -
At 40,I'm not sure its worth bothering getting involved in a pension scheme. You can gamble your own money just the same as the institutions can gamble it.
I agree especially in view of the projected figures now being quoted to my son and son in law. My SIL is so worried about his pension that he started a SIPP with Hargreaves Lansdown a few years ago. Even though the investments in his SIPP have now taken a hit there is time for it to recover before he retires. I did not start a company pension until late in my working life but have found that the best income comes from the investments I arranged myself.0 -
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Income drawdown means leaving the money invested and taking the pension income from the investments. It's also sometimes called an unsecured pension. Based on long term performance someone can expect to be able to take around 6% income without long term loss of capital.I'm puzzled by what you describe as 'income drawdown'. Surely, a pot of £150k would only generate around 4.5% of this as an annual income (i.e. £6,750 a year). Where did the 6% figure come from? I assume this is based on a flat rate, level pension, with no indexation.
Because annuity rates heavily depend on age it's generally the case that income drawdown will provide a higher income than an annuity at younger ages. According to the report of the Pensions Commission 75 is the optimal age to buy an annuity.
The amount you can take from the capital in drawdown is related to the 15 year gilt yield. I checked today and a 60 year old man would be limited to taking out no more than £10,800 a year from a £150,000 fund with no tax free cash taken. That can be increased by taking the tax free cash and using that to provide income. For a 50 year old man the maximum would be £9,180 and for a 65 year old man £12,240. At 75 and older using an ASP, £13,095. These numbers use a 4% gilt yield. For my 6% prudent long term income calculation the amount is £9,000 a year, less than the GAD limit, so permissible.0 -
Interesting, but I assume you can only do that with a personal pension, not an emplyer provided one.0
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Interesting, but I assume you can only do that with a personal pension, not an emplyer provided one.
Not a final salary scheme but you can with money purchase (after you transfer it to a personal pension/income drawdown plan or SIPP). You can transfer a final salary scheme as well but for most it wont be worth it. Although in some cases it can be.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 -
At 40,I'm not sure its worth bothering getting involved in a pension scheme. You can gamble your own money just the same as the institutions can gamble it.
What do you suggest as an alternative to a pension scheme?
"I can hear you whisperin', children, so I know you're down there. I can feel myself gettin' awful mad. I'm out of patience, children. I'm coming to find you now." - Harry Powell, Night of the Hunter, 1955.0 -
There is always the option of an ISA instead of a pension. The negative thing is that the limit is quite low, but if it rises above £10k a year then it's not a bad option. At least with an ISA you retain control of your money, unlike with a pension.0
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