Plan for Tomorrow, Live for Today : the 80 Plan

Eye2013

So George Osborne is going to trust us with our own pension money, great. I just wondered which camp most people are in.


1. Carefully and proactively manage your cashed in pension pot using NISA's, Bonds, High Interest Savings Accounts (remember those?) etc. Checking the financial pages every week and worrying about it all. Scrimp and save and worry to make sure you've still got enough in 20 years time.


2. The Easy Old Fashioned Option. Buy an annuity - for an index linked poor rate of return.


3. The 'Lamborghini Option' - spend and have fun for 10 years or so, lots of holidays and nice cars. Possibly top the lifestyle up with equity release. Make sure you've spent it all by say age 80, as after that all you'll be doing is sitting in a high back chair watching TV and going to bingo if you're lucky. Live on benefits (doesn't seem too bad by all accounts) and let the government pay for your Nursing Home fees. You might not make 80 anyway so you might as well have fun.


Me ? I've got no one to inherit anything so I might as well go for option 3 !


I'm sure this post will foster some passionate responses. My concern is that if a lot of people go for option 3 it will obviously stretch the UK government's benefits budget even more in the future.

Triumph13

In the interests of the UK economy, we clearly need to encourge them to buy Aston Martins and Jaguars instead of Lambos!

lvader

I don't fall in any of those, I have a old DB pension kicking in age 60, full state pension kicking in age 66, the DC pension pot is there mostly to allow me to retire early and to pay me an income until the other pensions kick in. I'll probably keep the pot invested mostly in equities unless bond yields/cash interest rates increase significantly. The withdrawal rate will be done in a way to minimise the amount of tax paid.

Tiglath

I'll go for a variation of option 1 but without the worrying.

EDIT: What lvader said below me.

atush

Eye2013 wrote: »

So George Osborne is going to trust us with our own pension money, great. I just wondered which camp most people are in.


1. Carefully and proactively manage your cashed in pension pot using NISA's, Bonds, High Interest Savings Accounts (remember those?) etc. Checking the financial pages every week and worrying about it all. Scrimp and save and worry to make sure you've still got enough in 20 years time.


2. The Easy Old Fashioned Option. Buy an annuity - for an index linked poor rate of return.


3. The 'Lamborghini Option' - spend and have fun for 10 years or so, lots of holidays and nice cars. Possibly top the lifestyle up with equity release. Make sure you've spent it all by say age 80, as after that all you'll be doing is sitting in a high back chair watching TV and going to bingo if you're lucky. Live on benefits (doesn't seem too bad by all accounts) and let the government pay for your Nursing Home fees. You might not make 80 anyway so you might as well have fun.


Me ? I've got no one to inherit anything so I might as well go for option 3 !


I'm sure this post will foster some passionate responses. My concern is that if a lot of people go for option 3 it will obviously stretch the UK government's benefits budget even more in the future.

Oi, don't discount option 3- the tax on bingo has been reduced.

Triumph13

Eye2013 wrote: »

Carefully and proactively manage your cashed in pension pot using NISA's, Bonds, High Interest Savings Accounts (remember those?) etc. Checking the financial pages every week and worrying about it all. Scrimp and save and worry to make sure you've still got enough in 20 years time.

I am amazed that so many people on various threads still seem totally wedded to the idea of getting the money out of the pension and into an ISA. I agree that that was very much the name of the game when the pension rules were so restrictive, but (depending on the small print of the rules) I can't see any real difference between managing the pot inside or outside the pension in the new world. I suspect it could take some considerable time for the mindset to change.

As to which type of person, again I'm not in any of those categories. Make sure we have enough 'guaranteed' income to live reasonably well, put the rest in mainly equities and use the natural yield to provide additional jam.

bigadaj

But filling up your isas means that you're not paying tax on the income so it's more a case of managing things properly as you go along.

Many people can then stage their pension withdrawal which is advantageous of you are sensible.

It would be interesting if it were extended to db schemes, though probably not good. You'd find someone barely above minimum wage potentially being exposed to 45% tax when they cash in their whole pot!