What to do with with £133,000

marklv

jojim65 wrote: »

I'm a public service worker and shortly to retire aged 49. I will receive a pension of £21,000 per year assuming I also take the maximum commutation of £133,000 tax free.



If I don't commute the my pension will be £28,000.

1. I would like to use the commutation to provide a monthly income
2. I'm also interested in being able to draw down on the capital to top up my monthly income to bring me back to my pre retirement monthly income.
3. I realise as I use my capital then my monthly income will drop and I will need to draw down more but assume I can factor in my life expectancy ish! and in the expectation as I grow very old I will need less cash.

My wife will retire at the same time and will receive slightly less than me. We have no dependants and mortgage of £98,000 with savings of £35,000

Any advice gratefully received.

Thanks

You haven't mentioned your occupation. I don't know of any job (public sector or otherwise) where you can retire at 49, as the legal minimum is 50. However I believe that the armed services and police may have special rules, so my assumption is that you work in one of these areas. You are certainly in a very fortunate position - to put it mildly!

If I was in your position I would take the commutation and use that to pay off the mortgage. Then you could always beef up your pension with a part-time job at B&Q or whatever.

Anastasia

I would take the £64,000 lump sum and £28,000 a year pension. Plan a holiday for when a retire and then look for a nice job with very little stress. Would probably reduce the mortgage, not pay off completely.

jojim65

Thanks very much for all replies, you are quite right I am to retire from the Police with about 31 years service to bring me in line with my wife who will retire at the same time with 30 years service.

Clearly none of us can predict the future but with canny investment and paying off the mortgage, the sums indicate we can maintain our current lifestyle without any real drop in standards.

I will have to wait 6 years to become index linked to the RPI, subject to an IFA's advice I think I will keep my £28,000 a year plus the wife's £26,000. Pay off a large chunk of the mortgage which is only 1% at present.

I know without dependents I'm in a good position and any job I do will be just for pocket money...

Strangely I have been blinkered into the large tax free sum which seemed very enticing but maybe not so much now....

hollie.weimeraner

jojim65 wrote: »

Yes, I still get a lump sum of about £64,000 if I take my full pension.
Thanks for all your help, it certainly gives food for thought.

I can now see it might be better taking a full pension and as long as I live beyond 72 ish I will be better off.

I will seek advice from an IFA shortly....

one more quick question..........would you pay the mortgage off with some of the commutation or just continue it with the maximum pension?

Check with your pensions department (don't just take my word for it). There is no lump sum payable with a Police pension unless you commute part of it. Maximum commutation is 25%

zygurat789

At a time when the private sectoer cannot afford to maintain final salary pension schemes this must be a real eye-opener. If ever the government was looking for a justifiable cost cutting area public sector pensions could be halved and still be generous to a fault.

lemma1968

To the OP - I'm dead jealous. Good for you mate. Enjoy your retirement. Having just started on the pension savings ladder at aged 40 (i know, what a dumbo leaving it so late!!!) I would dream of having a pension like yours. Well done.

marklv

jojim65 wrote: »

Thanks very much for all replies, you are quite right I am to retire from the Police with about 31 years service to bring me in line with my wife who will retire at the same time with 30 years service.

Clearly none of us can predict the future but with canny investment and paying off the mortgage, the sums indicate we can maintain our current lifestyle without any real drop in standards.

I will have to wait 6 years to become index linked to the RPI, subject to an IFA's advice I think I will keep my £28,000 a year plus the wife's £26,000. Pay off a large chunk of the mortgage which is only 1% at present.

I know without dependents I'm in a good position and any job I do will be just for pocket money...

Strangely I have been blinkered into the large tax free sum which seemed very enticing but maybe not so much now....

Sorry for being nosey, but I'm curious as to how anyone aged 49 or 50 can genuinely 'retire'. Surely you would get bored, would you not? There is only so long you can spend on the golf course? If I were you I would look for another job, maybe part-time, to beef up your pension until state retirement age. There is always demand for 'retired' police inspectors with security companies, training, etc.

marklv

zygurat789 wrote: »

At a time when the private sectoer cannot afford to maintain final salary pension schemes this must be a real eye-opener. If ever the government was looking for a justifiable cost cutting area public sector pensions could be halved and still be generous to a fault.

The Police gravy train will end soon. New joiners already have to stay in service until 55, and it won't be long before the 'old brigade' get their T&Cs changed as well - this will happen when the Tories come back in, mark my words. Personally, I would only have the pensions paid from age 65. The armed forces pensions also need to change, as they are also insanely generous.

Money_mad_4

Work out the maths. Your lump sum is tax free, You pay base rate on the rest and your wife will do hers separate. Take the large lum sum and you will save a lot of tax. You then need to give your kids a gift each year of 6k and then spend the rest on yourself. Hopefully by the time you die it will all be gone, Make sure that when you are around 65 that you also sell your house to your kids for next to nothing and then as long as you dont end up in a nursing home by the time you are 72 they cant take that as yours and force you to sell it to pay for your care. One last thing, ensure you dont have 20k in either cash or property or they will have that as well. Enjoy

Money_mad_4

I think Mark is missing the point with Police and service pensions, they are not given freely, they are paid for by those who are in the service, just like a pension that you can buy now which is matched by the HMRC, In any case, those squaddies deserve it, look at what they have to put up with these days