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  • FIRST POST
    • NaomiP
    • By NaomiP 10th Mar 17, 12:35 PM
    • 5Posts
    • 0Thanks
    NaomiP
    Surviving the next 5 years
    • #1
    • 10th Mar 17, 12:35 PM
    Surviving the next 5 years 10th Mar 17 at 12:35 PM
    ​Single 50 year old woman.
    Property owned outright, recently on the market for £495,000 in order to downsize.
    Money purchase pension worth ~£330,000
    Savings ~£15,000 and eroding gradually.
    No debts.
    Self-employed zero hour contract, capped at £1000 per month. Work is dwindling, last month invoice only £250
    Current outgoings ~£1500 per month.
    So the question is how can I access some of the money in my property or pension on a draw down basis until such time as either the property is sold or I reach 55 and can access my pension please?
    best wishes
    Naomi.
Page 1
    • xylophone
    • By xylophone 10th Mar 17, 12:43 PM
    • 21,641 Posts
    • 12,446 Thanks
    xylophone
    • #2
    • 10th Mar 17, 12:43 PM
    • #2
    • 10th Mar 17, 12:43 PM
    Are there no job opportunities available at all?

    You can't access your pension (except in case of severe ill health/terminal illness) until you are 55.

    Have you obtained a new state pension statement to help with planning for the future?

    https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

    How much capital will you have after you have sold your existing property and bought a new house?
    • ermine
    • By ermine 10th Mar 17, 6:35 PM
    • 539 Posts
    • 762 Thanks
    ermine
    • #3
    • 10th Mar 17, 6:35 PM
    • #3
    • 10th Mar 17, 6:35 PM

    So the question is how can I access some of the money in my property or pension on a draw down basis until such time as either the property is sold or I reach 55 and can access my pension please?
    Originally posted by NaomiP
    Take out a mortgage on your new place, or your old place if you stay. It doesn't have to be for the full monty, only for enough as you need to live on for the five years, so you should have a great LTV. Never pay off your mortgage before you get your pension. clearing it is what your 25% tax-free pension commencement lump sum is for. I screwed up that way too

    Alternatively rent for five years, and run down some of yoru capital. But you are then exposed to variations in house prices across those five years, which can go either way/
  • jamesd
    • #4
    • 10th Mar 17, 6:53 PM
    • #4
    • 10th Mar 17, 6:53 PM
    You can't get at pension money yet and your income situation doesn't seem likely to make a standard mortgage available. That leaves an equity release mortgage as an option without waiting to sell your home. Modern equity release does offer the option to draw down money gradually and to repay if desired.
    • Bravepants
    • By Bravepants 10th Mar 17, 7:16 PM
    • 187 Posts
    • 211 Thanks
    Bravepants
    • #5
    • 10th Mar 17, 7:16 PM
    • #5
    • 10th Mar 17, 7:16 PM
    It's a personal choice whether you take your 25% tax free lump sum. Sometimes the commutation rates just aren't worth it! It is NOT designed in for paying off your mortgage, although I guess a lot of people do. I would think carefully and get figures for remaining annual pension before you consider this as part of your plan.
    • mark1959
    • By mark1959 10th Mar 17, 7:25 PM
    • 193 Posts
    • 213 Thanks
    mark1959
    • #6
    • 10th Mar 17, 7:25 PM
    • #6
    • 10th Mar 17, 7:25 PM
    Get a better paid job.
    • fcandmp
    • By fcandmp 10th Mar 17, 10:12 PM
    • 110 Posts
    • 18 Thanks
    fcandmp
    • #7
    • 10th Mar 17, 10:12 PM
    • #7
    • 10th Mar 17, 10:12 PM
    What about renting a room? Can earn up to £7000 per year tax free. Not for everybody, but could be attractive income option.
  • jamesd
    • #8
    • 10th Mar 17, 11:28 PM
    • #8
    • 10th Mar 17, 11:28 PM
    It's a personal choice whether you take your 25% tax free lump sum. Sometimes the commutation rates just aren't worth it! It is NOT designed in for paying off your mortgage, although I guess a lot of people do. I would think carefully and get figures for remaining annual pension before you consider this as part of your plan.
    Originally posted by Bravepants
    This is about a money purchase pension. There is no commutation rate. In general:

    1. For defined contribution always take the maximum tax free lump sum, though not necessarily all at once. If you want guaranteed income, look into deferring your state pension before an annuity unless you have reason to believe your life expectancy is lower than normal, when the annuity might pay more, but buy that with the taxable money, not the tax free part.

    2. For defined benefit don't commute any income into lump sum and don't reverse commute lump sum to buy more than the standard pension. Commutation rates tend to be bad, reverse commutation even worse, "buy" more state pension by deferring that instead.
    Last edited by jamesd; 11-03-2017 at 1:21 AM.
    • BeatTheSystem
    • By BeatTheSystem 11th Mar 17, 1:34 AM
    • 138 Posts
    • 68 Thanks
    BeatTheSystem
    • #9
    • 11th Mar 17, 1:34 AM
    • #9
    • 11th Mar 17, 1:34 AM
    Maybe take in a lodger.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 8:54 AM
    • 6,537 Posts
    • 6,959 Thanks
    AnotherJoe
    ​Single 50 year old woman.
    Property owned outright, recently on the market for £495,000 in order to downsize.
    Money purchase pension worth ~£330,000
    Savings ~£15,000 and eroding gradually.
    No debts.
    Self-employed zero hour contract, capped at £1000 per month. Work is dwindling, last month invoice only £250
    Current outgoings ~£1500 per month.
    So the question is how can I access some of the money in my property or pension on a draw down basis until such time as either the property is sold or I reach 55 and can access my pension please?
    best wishes
    Naomi.
    Originally posted by NaomiP
    You can't.

    Your best bet is both to decrease outgoings (£1500/m is extraordinarily high as a single person) and increase income - lodger or better job.

    If you contemplate that your house will take so long to sell (up to five years!!) that you need to be taking this step of raiding your pension (which you cant do anyway) then you are asking far too much for the house.
    Last edited by AnotherJoe; 11-03-2017 at 5:08 PM.
    • bigadaj
    • By bigadaj 11th Mar 17, 10:37 AM
    • 9,157 Posts
    • 5,854 Thanks
    bigadaj
    Assuming your income would allow then 0% credit cards might tide you over for a year or two but not likely five.

    Teh simple answer is to reduce the asking price on the house and get it sold, as well as belt tightening of course.

    Also check your entitlement to benefits such as council tax relief, tax credits etc
    • McKneff
    • By McKneff 11th Mar 17, 11:00 AM
    • 35,344 Posts
    • 45,486 Thanks
    McKneff
    1500 a month is a lot of expenditure for a single person who is mortgage free.

    Do an SOA on here and we can help you go forward cutting down or out
    No one can make you feel inferior without your consent
    • atush
    • By atush 11th Mar 17, 12:22 PM
    • 15,938 Posts
    • 9,679 Thanks
    atush
    I agree you need better paid work. I agree that you should consider a lodger. These are the only 2 options open to you really. have you checked re your low income if you can have any benefits payable to you?

    I think getting a new small mtg could be good idea- if you can get one with such little income coming in.

    I also agree your outgoings are high.
    • Bravepants
    • By Bravepants 13th Mar 17, 8:02 PM
    • 187 Posts
    • 211 Thanks
    Bravepants
    This is about a money purchase pension. There is no commutation rate.
    Originally posted by jamesd
    Of course! Sorry I must have misread.
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