Pensions Planning: The NUMBER

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  • cloud_dog
    cloud_dog Posts: 6,055 Forumite
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    stoozie1 wrote: »
    Do you need to take your lump sum immediately?
    It depends on the OP and OP wife ISA situation and if they have any ongoing space in their ISAs. If they do, then it probably makes sense to take it and start stuffing it in to ISAs (potentially S&S ISAs).
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • cloud_dog
    cloud_dog Posts: 6,055 Forumite
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    DCB1967 wrote: »
    Me
    Retire at 55 with pension pot of £362,000*.
    Take 25% lump sum = £ 90,500
    Balance = £271,500

    Need to fund 12 years gap until State Retirement Age (SRA).
    Over the 12 years I would certainly withdraw the maximum upto my personal income tax allowance (17/18 £11500) from the pension pot, with any spare monies being placed in to a S&S ISA (simply moving the pension investment in to a ISA investment; of the same).

    I might even be tempted to withdraw more than the personal allowance and again place this increased excess in to a S&S ISA. You'd need to work through the number etc and a lot depends on your ISA situations, now and ongoing. Part of the reason for considering this would be whether you could get to the position of being able to gift your wife some of your personal allowance at some point.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • DCB1967
    DCB1967 Posts: 10 Forumite
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    cloud_dog wrote: »
    Hi

    A little unsure where this 'lump sum' comes from? Is this pre-existing savings, or existing savings plus the TFLS (£90k)??

    One thought would be to draw down from your pension whilst you are not working and not claiming the SP, that way all / a large part of your pension income would be tax-free. You can then retain / continue growing the 'lump sum' pot and draw on that as the pension pot diminishes / you are in receipt of SP due hopefully to it being in an ISA and therefore tax free (????)




    Hi


    The lump sum is the sum of my wife's forecasted NHS lump sum and my lower end calculation of 25% of the pot.
  • cloud_dog
    cloud_dog Posts: 6,055 Forumite
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    Ok, so what existing utilisation of your ISA allowances do you make? You could shelter £40k per year in to an ISA, and if (as I mentioned) your were drawing additional money from your pension (which I am assuming is invested) you would simply place it in to the same / similar investment within an ISA that you are comfortable with.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • stoozie1
    stoozie1 Posts: 656 Forumite
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    cloud_dog wrote: »
    It depends on the OP and OP wife ISA situation and if they have any ongoing space in their ISAs. If they do, then it probably makes sense to take it and start stuffing it in to ISAs (potentially S&S ISAs).

    Unless OP can use it spread out over more years to effectively increase his personal allowance?
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- £560 April £2670
  • cloud_dog
    cloud_dog Posts: 6,055 Forumite
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    stoozie1 wrote: »
    Unless OP can use it spread out over more years to effectively increase his personal allowance?
    Yes, I agree. As mentioned early on the OP needs to work through the scenarios and numbers to identify what is best for them.

    As a bare minimum they should ensure they do not leave any unused personal tax allowance on the table.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • DCB1967
    DCB1967 Posts: 10 Forumite
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    cloud_dog wrote: »
    Ok, so what existing utilisation of your ISA allowances do you make? You could shelter £40k per year in to an ISA, and if (as I mentioned) your were drawing additional money from your pension (which I am assuming is invested) you would simply place it in to the same / similar investment within an ISA that you are comfortable with.


    I have been concentrating on making the maximum contribution to my pension so shall have very little in ISA's .


    No one has blown me out of the water with this calculation, so I hope that the basis of my plan is feasible?
  • stoozie1
    stoozie1 Posts: 656 Forumite
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    in the years where all of 'your' component of the joint income is coming from tax-free/below personal allowance income, remember that you can give some of your unused personal allowance to your wife, thus increasing her net pay.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- £560 April £2670
  • DCB1967
    DCB1967 Posts: 10 Forumite
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    stoozie1 wrote: »
    in the years where all of 'your' component of the joint income is coming from tax-free/below personal allowance income, remember that you can give some of your unused personal allowance to your wife, thus increasing her net pay.




    Thanks, I didn't realize this was possible.
  • DCB1967
    DCB1967 Posts: 10 Forumite
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    DCB1967 wrote: »
    Thanks, I didn't realize this was possible.


    While number crunching and eating my lunch, I have realised that I should also add the interest on the lumps sum at SRA too. That is if it hasn't all been spent in the intervening 12 years of early retirement.
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