Bridging loan before access to pension at 55??
Comments
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Thanks ukdw! Great insights and ideas. I agree, there seems to be a real gap in the market here. I'm amazed it's not easier to find an off-the-shelf loan product for such circumstances.
I hope I don't need to get such a loan as I think I can adjust lifestyle budget quite easily to cope. This was more of an exploratory 'what if' - as in, 'what if I decided to sustain current lifestyle or even spend more but needed to incur a debt over a couple of years to do so'? I have plenty in pensions to cover it and don't really care about that perceived wastage.
I like the idea of getting a bigger loan and using a portion of it as monthly repayments, then repay early in full when pensions access kicks in.
I'd be intrigued to know which of the above solutions you're thinking of going with, if any??0 -
Bridging loans have no monthly repayments.0
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When exactly do you turn 55? As discussed above, it is highly likely the minimum access age goes up to 57 on 6 April 2028. If your birthday is 6 April 1973 or later, the earliest you will be able to access your pension is 2030.
This is partly speculation, however the Government has indicated that the minimum access age will go up to 57 in 2028, they have not changed their minds, and by far the most likely date for this is 6 April. If the previous increase from 50 to 55 in 2010 is any guide, there will be no tapering.0 -
Have you already invested the £150k so it's making you £15k a year in interest? Peer to peer lending can deliver this, though a 7% target helps with increasing diversification.-I earn a couple of £Ks per year easy enough from matched betting and other hobbies / fun activities but wouldn't want to engage in any proper work beyond this.
-I do think I have enough to live off until 55 (c. £150k)
What do you need as a minimum and want to live on?
Do you want to try to preserve the £150k of capital or are you happy to gradually drain it to boost income.
Equity release is the only loan product I know of that meets the requirement and you may be too young for it.0 -
I'd be intrigued to know which of the above solutions you're thinking of going with, if any??
My most likely time of running out of cash was going to be at about age 57 while waiting for my age 60 DB pension to be available. I would have most likely tried to get a secured loan (ideally an offset mortgage which can be drawn down as needed), downsized, or taken my DB pension early. No longer relevant in my case as I transferred out the DB pension into a DC.0 -
@ukdw - Interesting. I did a DB to DC transfer about a year ago. A painful process in itself but so glad I did it
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Thank you all for the continued insights and views.
In posting on here these last couple of days, I've found it really fascinating how everyone has slightly different approaches towards retirement. It's also made me realise I probably have far more of a 'loose' approach than most I guess don't really see retiring as a hard cut-off point or a set of rigid numbers but more a work in progress, since life is very much like that.
Just to fill in some gaps... I have around 550k across pension and non-pension. No mortgage or dependents. For me, the big picture is, this should be sufficient to generate enough passive return to sustain my current level of spending forever more - which is, 1500 per month (500 bills, 800 living, 200 irregular or unforeseen extras). I consider myself already retired, as I've stopped working. The potential challenge is that 'only' 150k of this is non-pension (plus 10k in cash), which is my 10-year (9.5 to be exact) pre-pension fund. I'm assuming a spend of around 1500 pm, as above, growing in line with inflation with investment growth on the 150k of 3% above inflation. I could easily live off half this spend if I wanted to or had to but it'd be good to know what a plan might look like if I wanted to continue or even increase expenditure ahead of pension access and/or in the last 2 years, where budgeting needs to be tighter, I had a succession of unforeseen events - the roof comes off the house and the car gives up the ghost etc etc...
I have been doing a lot of reading into the pension access age changing to 57. If they do switch it to mirror the state pension age increase, fingers crossed I'd just make the cut as I turn 55 in 2027. There's a good chance it won't happen IMO. Talking to contacts in the public sector, legislation progress in this area seems to have hit a real roadblock these past 12 months as government has had other erm priorities. We'll see. Interesting times!0 -
I have been doing a lot of reading into the pension access age changing to 57. If they do switch it to mirror the state pension age increase, fingers crossed I'd just make the cut as I turn 55 in 2027.
So you were born before 6 April 1973?There's a good chance it won't happen IMO. Talking to contacts in the public sector, legislation progress in this area seems to have hit a real roadblock these past 12 months as government has had other erm priorities. We'll see. Interesting times!
As you say they've had other priorities, but they have a whole ten years to do the paperwork. A widening gap between minimum pension age and State Pension Age creates a higher risk that people spend all their pension money and then claim means-tested benefits prior to State Pension starting. Neither the red team nor the blue team has shown any interest in opposing the rise in minimum access age. It will almost certainly happen.
However if you turn 55 before 6 April, it is very possible that you will be able to move your pensions into income drawdown before 6 April, and then after 6 April you will still be able to take income from pensions already in drawdown. This is what people did who turned 50 just before 6 April 2010 did to ensure they weren't locked out for up to 5 years. All speculation, but it's logical to assume it will work in roughly the same way.jamesd wrote:Equity release is the only loan product I know of that meets the requirement and you may be too young for it.
Way too young. To the best of my knowledge the minimum age for equity release is 55, and even then it's very rarely a good idea, as you can only get a quarter of the house's value, in exchange for which the lender probably gets the whole house on death.0 -
Yes, born Nov 1972.0
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