Early-retirement wannabe

gadgetmind

FIRSTTIMER wrote: »

if I have maxed out the the work pension.

What do you mean by "maxed out"? There is Lifetime Allowance, Annual Allowance and then maybe some employer/scheme rules, so which are you banging your head against?

And do you have any 40%/60%+/45% band left?

FIRSTTIMER

I can only purchase a maximum of £6800 across all education pension flexibilities. I have done this. I pay in 18.1% per annum of my salary and I cannot do ANY more as I get a letter saying so yearly. Hence S&S/LISA

FIRSTTIMER

Employer contribution is 16.3% I believe - albeit, its a government funded defined scheme - so this is irrelevant I suppose. Plan to retire at 60.

NoMore

How old are you now ? A sipp would also be an option to use any aa left.

FIRSTTIMER

35 - I don't really fancy a sipp tbh - rather have the capital value via S&S ISA/LISA and then maybe take less lump sum with retirement income

Triumph13

hugheskevi wrote: »

There are, but they all involve hassle and loss of value in one form or another.

If I didn't plan to go traveling for a long period, it would be easy, as I would simply use a mortgage to achieve this. The travel element doesn't entirely preclude this, but it does make it harder and introduce risk. I would need to re-mortgage before going traveling, rent out property and then port mortgage to new property.

There would be no guarantee I could port the mortgage, especially as I would have no income. I could mitigate that risk by leaving work on unpaid leave rather than resignation, meaning I could if necessary return to work for a while which would mean there would no reason a porting request would be rejected.

The above would of course be a reasonable amount of hassle. There would also be additional mortgage fees payable, and I would probably have to pay additional stamp duty on my next house purchase, as my wife has first-time buyer status still but if I have a mortgage to port I would need to be involved in the purchase. Although the rental income would probably more than offset this, as I would have a fully furnished house ready to let out which would yield a lot more than the money from a house sale held in savings (needs to be low/zero risk as would be using it within about 2-3 years).

On balance, I'm inclined to think all the above is too much phaff. The simplest approach is to sell my current house, go travel and buy next house in wife's name, later changing ownership structure to whatever is most appropriate. It might be that I can raise money against the property, but as I don't intend to have any income I can't rely on that. And it would be likely to be at interest rates higher than conventional mortgages.

Why not sell current house / buy retirement house immediately on retirement (gets that settled and out of the way / derisked) then rent that property out for a few years whilst you travel?

gadgetmind

FIRSTTIMER wrote: »

35 - I don't really fancy a sipp tbh - rather have the capital value via S&S ISA/LISA and then maybe take less lump sum with retirement income

A SIPP is as much capital as an ISA and can contain pretty much the same assets. It's just that an ISA is capital that's already been taxed whereas a SIPP is taxed on the way out (other than the 25% lump sum).

FIRSTTIMER

Thanks for this. The SIPP idea puts me off as I do not want 25% cash and then the rest in a pension. I want the full SIPP as tax free cash - can this happen?

I also feel having access to S&S ISA cash if needed is better than no access to a SIPP for 20 odd years in addition to all my money going into work pension too.

Maybe I!!!8217;m thinking wrong?

NoMore

Looking at this the wrong way round. What is the objective for this extra money? That would help decide the appropriate vehicle for it. Instead of just randomally choosing something because you don!!!8217;t famcy it.

Anonymous101

FIRSTTIMER wrote: »

Thanks for this. The SIPP idea puts me off as I do not want 25% cash and then the rest in a pension. I want the full SIPP as tax free cash - can this happen?

I also feel having access to S&S ISA cash if needed is better than no access to a SIPP for 20 odd years in addition to all my money going into work pension too.

Maybe I!!!8217;m thinking wrong?

Pensions are contributed to before you pay tax. Any money you take out of a pension will be subject to income tax aside from the 25% allowance. The only way you can avoid paying tax on a pension is therefore to keep your withdrawals below the basic rate income tax threshold.

The accessibility of an ISA is both a positive and a negative. Good for short term cash should you need it but generally bad for long term retirement type saving.