Over 50s: what will you do with your tax-free cash?

lilac_lady

I think that those of us who save mainly do it for peace of mind, especially if your childhood was in a family with money problems. I'm in my fifties and I try to save a bit for my "old age" even though I may not reach it. I too paid the "big stamp" when other women thought I was silly to do so. Now that I'm divorced, I have only me to rely on so I'm glad that I have the savings mentality that so many people mock. I travel, eat out (sometimes), enjoy wine, friends and books. I'm solvent and content with my lot.

margaretclare

lilac_lady wrote:

I think that those of us who save mainly do it for peace of mind, especially if your childhood was in a family with money problems. I'm in my fifties and I try to save a bit for my "old age" even though I may not reach it. I too paid the "big stamp" when other women thought I was silly to do so. Now that I'm divorced, I have only me to rely on so I'm glad that I have the savings mentality that so many people mock. I travel, eat out (sometimes), enjoy wine, friends and books. I'm solvent and content with my lot.

Hi Lilac_lady

Yes, you're right - it's all about peace of mind, being able to sleep easily of a night. It's the 'savings mentality' and personally I'm no longer bothered if people mock - let them, if that's what makes them happy. I know who will have the last laugh. I know of women just coming up to retirement, or in the early years of retirement, who might be regretting the decisions and actions they took in the past, the opportunities that I took and that they chose not to take. Of course, they will have excuses - they'll say 'well, we were never told you could go on paying the full stamp, we were told you "had to" pay the smaller contribution, we didn't have a choice'. Or they'll say 'we needed the money then, not later'. Or 'we were told our husband's contribution would take care of us as well, cradle to grave'. I've heard all the excuses, and then some.

We are just being landed with some big expenses this year, one of which is the 75-year old asbestos-tiled roof which has to be replaced, and where would a pair of wrinklies afford that from, if not from savings?

I wish I'd kept that 'savings mentality' over many years instead of recovering it from my early years, I'd be a darned sight better off today! As it is, I'm not rich but I'm a long way from being poor.

Best wishes

Margaret Clare

lilac_lady

When I retire in a few years I plan to take the maximum lump sum I can get from my pension fund, save half ( for things like MC's new roof) and spend the rest on holidays, my grandchildren and whatever else I fancy. I think I'll still save a bit because no-one will come along and bail me out. It's a question of responsibility I suppose. We're all different and deal with money differently but I know I could never be at peace with myself if I owed money and couldn't pay it back.

Pete155

EdInvestor wrote:

It applies to all personal pensions.It's likely to apply to all money purchase company pensions, though not all companies may have yet adjusted their regulations to apply it.The same case with AVCs and FSAVCs.

It's much less likely to apply to final salary company pensions, and if it does, you could be disadvantaged by doing it. But no doubt Pal and DFC can tell us more on the state of play at company pensions, current and deferred.

I have asked Legal and General if I can do this with my individual stakeholder and they say the only way is to tranfer my existing pot into a new income drawdown pension and take the money from there. Then to continue investing I need to start a new stakeholder from scratch. And I can only do all this if it is arranged by an IFA, I can't do it on my own. Do they know what they are talking about??

EdInvestor

Do they know what they are talking about??

Yes and no.Step one is as they say, to transfer the money into "a new drawdown pension" - what they mean is a SIPP. You can do this on your own. Choose a low cost provider like https://www.sippdeal.co.uk or https://www.hargreaveslansdown.co.uk open account there, write to L&G and instrict them to transfer the money. No IFA required.

The SIPP will give you the 25% tax free cash and then the rest can be invested to grow until you need to take an income after retirement.You don't have to take an income - though you can if you need it.[You should be able to get the insurer to give you the 25% and then transfer the rest to the SIPP but this seems to take ages, so best to transfer the whole thing to the SIPP and get the people there to give you the 25%.]

You can't keep on investing into this fund if you take all 25% as cash. You can keep investing if you take only part of the cash.This is called "phased drawdown" and not all of the cheaper providers offer it, so ask first.

Try https://www.sippdealextra.co.uk for phased drawdown, I believe Hargreaves Lansdown don't offer this yet, anyone confirm?

The thing to do if you want to keep investing would be to take say 24% of the cash , which would put the vast majority of the fund into drawdown,but leave a small part of it "unvested" which could then take ongoing contributions. Check first about this.

They said the idea of A-day was to "simplify" pensions but it looks to me they are just as horrible as ever when you look under the bonnet.

Are you really sure you want to put more money in? Your ISA might be a better slot for any new savings/investments for the time being as if you don't use this 7k allowance, you lose it.Whereas big lump sums can be put into pensions later and still get tax relief.