Is this year a good time to retire?

luctom

Have no mort,/debts..good savings and a canny pension....would have considered retiring ?September .....but not so sure now...can work longer with good income....what about cost of living poss hikes in tax?? should I hang on or go? ta

jamesd

It's a bad time to be buying an annuity with money from a money purchase pension because you'd be converting to the fixed annuity payments while the stock market is down.

It's not a particularly bad time to be converting from some types of equity to corporate bonds, particularly high yield corporate bonds, because these types of bonds also have depressed prices. Government bonds in the UK and US are probably overpriced due to high demand, and may lose capital value due to large supply to finance government debt. Income drawdown could be a decent option if you are really keen to retire now.

A best option might involve buying some of those bonds now and giving time for equity prices to do a bit of recovering, say a year or two.

Say more about your pensions, including the state pensions you'd get if you're old enough, and your rough age including how near to 65 and it'll be possible to say something more useful. If you want investment choice opinion say more about how the money is invested.

Do you have a spouse? If so, knowing more about their pension situation and age would be interesting because each of you would get your own personal tax allowance, making even distribution of pension between you at least up to 10,000 a year including state pensions tax-efficient. Taking some of your pension to fund payments into a pension for the spouse may be useful.

ipri

Thanks...I will have an NHS superann. pension....59 this year..I believe I dont have to buy an annuity...wife still working and will do so for a couple more years...no nhs pension...I'm mainly concerned about the tax increases that we all face to pay for the current spending by the govt. thanks

dunstonh

I'm mainly concerned about the tax increases that we all face to pay for the current spending by the govt. thanks

More than offset by the annual increase in personal allowances, no NI for you to pay from age 60 (and NI is likely to be where the Govt increase it) and the fact you are still buying years of service which will increase you pension income and lump sum.

There is no justification on the basis of potential future tax rises. You would just be guaranteeing yourself a lower income on the pension,a lower tax free lump sum on the pension and a lower overall income as you wouldnt have any pay from employment.

ipri

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There is no justification on the basis of potential future tax rises. You would just be guaranteeing yourself a lower income on the pension,a lower tax free lump sum on the pension and a lower overall income as you wouldnt have any pay from employment.[/quote]


Thanks...not sure what you mean in the last paragraph........also..not sure how to include selected text for quote!! ian

dunstonh

...not sure what you mean in the last paragraph

By retiring at this time there are multiple hits you will be taking:

1 - By retiring you will lose your employment income. So, you will be financially worse off.
2 - You will also stop adding service to your final salary pension scheme which is based on service (the longer in work the bigger their pension). So, the retirement income will be lower and the tax free cash lower.
3 - From age 60, you dont pay national insurance. So, even if tax (and more likely) NI, goes up, the up will not notice this and could still end up better off due to not paying NI.
4 - VAT is likely to go up. Obviously back to 17.5% but possibly to 20%. That will impact whether you are working or not. Basic rate of tax is probably going to remain unchanged so you are not likely to be hit directly.

So, there is nothing in the current and possible future economic situation that suggests that retiring early is good for financial reasons.

dgbshifnal

Dunstonh mentions in his response that there is ni NI to pay at 60.

I am in full-time employment, was 60 in November, and am still being deducted NI.

Have I missed something here, please?

tanith

Assuming you are a man you will continue to pay N/I until you reach State Pension age at 65 .... woman stop at 60 but that will all change as the gap between men and woman retiring lessens..

dunstonh

Ipri has Sarah in her sig so I was making the assumption that she is female.

cyclonebri1

Forget the finanial side if you are happy with your existing pension arrangement.

I know this is a money saving site but from my perspective the question would be do I want 6 extra years doing what I want before I die?

For me there could only be one answer;)

ipri

cyclonebri1 wrote: »

For me there could only be one answer;)

def something in that!!...I'ma bloke!..dont know how "sarah" got there...lets see if my quote worked!