Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Ok for now
    • By Ok for now 27th Nov 17, 9:37 PM
    • 11Posts
    • 3Thanks
    Ok for now
    Another sanity check
    • #1
    • 27th Nov 17, 9:37 PM
    Another sanity check 27th Nov 17 at 9:37 PM
    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
Page 1
    • Nitram29
    • By Nitram29 27th Nov 17, 9:59 PM
    • 20 Posts
    • 28 Thanks
    Nitram29
    • #2
    • 27th Nov 17, 9:59 PM
    • #2
    • 27th Nov 17, 9:59 PM
    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.
    • justme111
    • By justme111 27th Nov 17, 10:11 PM
    • 2,878 Posts
    • 2,764 Thanks
    justme111
    • #3
    • 27th Nov 17, 10:11 PM
    • #3
    • 27th Nov 17, 10:11 PM
    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.
    Originally posted by Nitram29
    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.
    • Nitram29
    • By Nitram29 27th Nov 17, 10:18 PM
    • 20 Posts
    • 28 Thanks
    Nitram29
    • #4
    • 27th Nov 17, 10:18 PM
    • #4
    • 27th Nov 17, 10:18 PM
    I am a simple man I like simple maths.

    Point conceded but we are at wet finger in the air level here.
    • Ok for now
    • By Ok for now 27th Nov 17, 10:35 PM
    • 11 Posts
    • 3 Thanks
    Ok for now
    • #5
    • 27th Nov 17, 10:35 PM
    Another sanity check
    • #5
    • 27th Nov 17, 10:35 PM
    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.

    Thanks
    • dunstonh
    • By dunstonh 27th Nov 17, 10:36 PM
    • 89,849 Posts
    • 56,500 Thanks
    dunstonh
    • #6
    • 27th Nov 17, 10:36 PM
    • #6
    • 27th Nov 17, 10:36 PM
    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). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 27th Nov 17, 10:45 PM
    • 23,628 Posts
    • 13,758 Thanks
    xylophone
    • #7
    • 27th Nov 17, 10:45 PM
    • #7
    • 27th Nov 17, 10:45 PM
    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?
    • newatc
    • By newatc 27th Nov 17, 10:47 PM
    • 109 Posts
    • 91 Thanks
    newatc
    • #8
    • 27th Nov 17, 10:47 PM
    • #8
    • 27th Nov 17, 10:47 PM
    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.
    • Ok for now
    • By Ok for now 27th Nov 17, 10:57 PM
    • 11 Posts
    • 3 Thanks
    Ok for now
    • #9
    • 27th Nov 17, 10:57 PM
    Another sanity check
    • #9
    • 27th Nov 17, 10:57 PM
    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.

    Thanks
    • Ok for now
    • By Ok for now 27th Nov 17, 11:08 PM
    • 11 Posts
    • 3 Thanks
    Ok for now
    Another sanity check
    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.
    • xylophone
    • By xylophone 27th Nov 17, 11:33 PM
    • 23,628 Posts
    • 13,758 Thanks
    xylophone
    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.pdf
    • kidmugsy
    • By kidmugsy 27th Nov 17, 11:35 PM
    • 9,893 Posts
    • 6,671 Thanks
    kidmugsy
    In your shoes I might retire soon and make up for missing income in 17/18 by using some of the TFLS from the money purchase scheme. Then in 18/19 onwards I'd drawdown enough from that scheme to use up my Personal Allowance vs income tax, and boost that to £25k using more of the TFLS.
    At 60 I'd start my DB pension. Then I'd boost my income to the desired £25k using more drawdown and TFLS. Finally at 67 I'd have an adequate annual income from DB + State Retirement Pension and a useful back-up of cash left in my money purchase pension.

    I suppose that if I were an unconfident investor I might invest most of the capital within the money purchase scheme into a "ladder" of gilts.

    The alternative is one you've suggested: work part time or even just find an undemanding job wth a different employer. There's no sense in risking your health by sticking to the wrong job when you have such a fine level of capital/pension rights under your belt.
    Free the dunston one next time too.
    • Ok for now
    • By Ok for now 28th Nov 17, 7:14 AM
    • 11 Posts
    • 3 Thanks
    Ok for now
    Another sanity check
    That's really helpful and reassuring. Often difficult to know how to assess ones situation. Worry about inflation too, but at least have a little indexation (capped) built into DB pension. Need to think about part time, different job, or one more year!

    Great to have your input.
    • justme111
    • By justme111 28th Nov 17, 8:01 AM
    • 2,878 Posts
    • 2,764 Thanks
    justme111
    you have about 25O k spare- why would you need to think about OMY (one more year, a recognised syndrome
    • Ok for now
    • By Ok for now 28th Nov 17, 8:49 PM
    • 11 Posts
    • 3 Thanks
    Ok for now
    Another sanity check
    It would be £225k ( depending on how I take it), but very much appreciate your point about one more year. Definitely one I will mull over.

    Thanks
    • justme111
    • By justme111 29th Nov 17, 12:16 AM
    • 2,878 Posts
    • 2,764 Thanks
    justme111
    I wiild have imagined you done that one more year and have not 300 k but lets say 330 k. Why 330 would be enough and 300 not so ?
    • Ok for now
    • By Ok for now 29th Nov 17, 8:19 AM
    • 11 Posts
    • 3 Thanks
    Ok for now
    Another sanity check
    Yes, a good point.

    Kidmugsy, can I ask you how I would go about looking into a ladder of gilts - not sure I can do that in the schemes I'm am in. Where would I be best moving funds to?

    Thanks
    • enthusiasticsaver
    • By enthusiasticsaver 29th Nov 17, 5:03 PM
    • 4,827 Posts
    • 9,111 Thanks
    enthusiasticsaver
    You have several options depending on whether you plan on going before 60 or before. If you use the DC pot to bridge the gap between now and 60 that reduces it by £75k - £100k at £25k per annum depending on returns. If you then take your DB pension at 60 there will be a £6.5k shortfall for 6 years which presumably again will come from the DC pot until your state pension kicks in. I would say you can afford to go now or within the next year. I don't think I would go for an annuity but if it gives you peace of mind then you should do it.
    2 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Ok for now
    • By Ok for now 30th Nov 17, 8:23 AM
    • 11 Posts
    • 3 Thanks
    Ok for now
    Another sanity check
    Thanks, that's helpful.
    • Alter ego
    • By Alter ego 30th Nov 17, 8:34 AM
    • 2,187 Posts
    • 2,126 Thanks
    Alter ego
    DO IT! Life's not a rehearsal.
    Ignore me if you like, it's not the real me anyway.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,407Posts Today

8,243Users online

Martin's Twitter