Must I stay or can I go

bigchipper

Thanks to all for the helpful contributions so far. Given my need to fund the mortgage for another 7 years and impending uni costs for ther kids I think I will really need to stick things out at work (at least for the next 4 -5 years when I will re-evaluate to see if I can go a couple of years early with whatever I have left.)

In terms of what to do with the inheritance I am minded to buy added civil service pension with some of it. The calculator on the civil service pensions website indicates that for the classic scheme I am in I can buy a maximum of £4400 added pension (indexed linked to CPI) for around £88k (I would then have to reclaim the 20% taxback from HMRC directly).

Given my age and proximity to retirement this seems worth it as it is tax efficient (I think I have enough unused annual allowance over 3 years to be able to do this) and rules out any investment risk. Does that seem a reasonable approach?

gadgetmind

bigchipper wrote: »

I think I have enough unused annual allowance over 3 years to be able to do this) and rules out any investment risk. Does that seem a reasonable approach?

Get lots of advice on this as it's easy to work out for DC pensions (once you get your head around Pension Input Periods!) but it's more complicated for DB ones.

I know *very* little about this as I'm 100% private pensions, but I think you need to work out what HMRC think your pot has increased by rather than looking at what you've actually put in.

Can you put that £88k gross in over a few years?

BTW, return wise it's a corker given the index linking and lack of risk.

Rollinghome

bigchipper wrote: »

Thanks to all for the helpful contributions so far. Given my need to fund the mortgage for another 7 years and impending uni costs for ther kids I think I will really need to stick things out at work (at least for the next 4 -5 years when I will re-evaluate to see if I can go a couple of years early with whatever I have left.)

I think you're being sensible given your position.

I retired early and so very much in favour of the idea. But before I did, I made sure I had in place good I/L pensions plus investments that would ensure the standard of living I wanted without any possibility of future worries. I have large amounts in equities and other investments but don't lose a minute's sleep worrying where markets may go as I would if I depended on them for my income.

There are currently so many retired people who made optimistic assumptions about the return on investments and are paying the price with worry if not poverty. It's not a position I've ever want to be in.

The fact is that any investment with the potential to return 4 or 5% above inflation over the next 5 years or beyond comes with risk and there is absolutely no way of knowing what the actual return would be. It could be either a positive or negative figure.

It's very different from the projections for someone planning for retirement some years hence who can change plans or decide to work longer as necessary if their assumptions are wrong.

Unless you're sure your guaranteed indexed income streams, such as your pension, would be sufficient, you would have the problem of both not knowing what your income would be but also, with children that may or may not go into higher education, not knowing what your income needs will be. We don't even know for sure if the state pension will continue as it is or what the provisions for elderly care will be.

Some people are happy living day to day on very small amounts of money. Having that worry doesn't sound much fun to me.

bigchipper

gadgetmind wrote: »

Get lots of advice on this as it's easy to work out for DC pensions (once you get your head around Pension Input Periods!) but it's more complicated for DB ones.

I know *very* little about this as I'm 100% private pensions, but I think you need to work out what HMRC think your pot has increased by rather than looking at what you've actually put in.

Can you put that £88k gross in over a few years?

BTW, return wise it's a corker given the index linking and lack of risk.

Thanks. There is a complicated formula for working it out on the CS pension website that I have checked but will double and triple check

I could pay in over a couple of years but of course the cost will rise as i age

bigchipper

Rollinghome wrote: »

I think you're being sensible given your position.

I retired early and so very much in favour of the idea. But before I did, I made sure I had in place good I/L pensions plus investments that would ensure the standard of living I wanted without any possibility of future worries. I have large amounts in equities and other investments but don't lose a minute's sleep worrying where markets may go as I would if I depended on them for my income.

There are currently so many retired people who made optimistic assumptions about the return on investments and are paying the price with worry if not poverty. It's not a position I've ever want to be in.

The fact is that any investment with the potential to return 4 or 5% above inflation over the next 5 years or beyond comes with risk and there is absolutely no way of knowing what the actual return would be. It could be either a positive or negative figure.

It's very different from the projections for someone planning for retirement some years hence who can change plans or decide to work longer as necessary if their assumptions are wrong.

Unless you're sure your guaranteed indexed income streams, such as your pension, would be sufficient, you would have the problem of both not knowing what your income would be but also, with children that may or may not go into higher education, not knowing what your income needs will be. We don't even know for sure if the state pension will continue as it is or what the provisions for elderly care will be.

Some people are happy living day to day on very small amounts of money. Having that worry doesn't sound much fun to me.

Agreed, its not really that long for me to stick it out and I'd rather wait until I was sure I was financially secure before going rather than going too soon and taking the risk of not being sufficiently solvent to enjoy it.