Retiring early and wondering 'what dont I know'

IGraham

Probably retiring early and wondering 'what dont I know' that I should know


I'm 61 in April and am signing on as unemployed as I have Pernicious Anaemia and ME/CFS (just call me lucky) between them I've little chance of returning to work.
So am looking at early retirement and funding myself till I reach state pension age.
I do have £60.000 in pension funds and talking to a financial adviser that can be worked to give me £100 a week (tax free lump sum spread over the period plus a weekly pension), not a fortune but I can live on that


What I want to know is 'What dont I know' that could make life easier or harder, are there any nasty surprises

xylophone

Are you entitled to ESA?
https://www.gov.uk/employment-support-allowance/overview

jamesd

It appears that you were born between 6 March 1954 - 5 April 1954 so have a state pension date of 6 September 2019.

That income figure looks too low for the amount involved and a drawing period of just four and a half years. Ignoring interest/investment returns just the capital amount of £60,000 divided by the number of weeks comes to £256 a week if you are content to drain all of the capital before state pension age. About £13,333 a year. Just about all of it taxable because the portion over the personal allowance would be mostly coming from an ISA.

Currently the GAD limit would block you drawing at this rate but from 6 April 2015 you can switch to flexi-access drawdown and take money out at any desired rate.

What sort of state pension level do you expect? Any other pensions? Do you want to aim for a level income from now until death, or at least for say thirty years? What sort of income is tolerable but low, what about OK?

Do you have a spouse, if so how does their situation fit into this?

Do you own a property, if so what sort of value and are you interested in either considering downsizing to increase income and reduce expenses or using a lifetime/equity release mortgage to increase income?

What did you tell the financial adviser you wanted to do? That is, I asked some questions, how did you answer those for the adviser to do the planning?:)

What interaction do you expect between means tested unemployment benefit and this pension income? I expect the unemployment money to stop as soon as you start taking this and have been claiming for the six months for which you're entitled to earnings-related benefit. that's because your income would be over the level at which you're entitled to the means tested benefit.

McKneff

I've had pernicious aenemia for over 20 years, it has never stoppedme from working full time or later on in my working life, part time. The only thing it ever affected was the bother of going to the docs every 3 months
for a b12 injection ???


How badly does your ME affect you... you may be able to get ESA if you see your doc and he pronounced you unfit to work.

IGraham

ok a bit of refinement


I'll be signing of unemployment to move onto self financed – after 6 April 2015
yes retire 19/09/2019
Single, no kids, no property at the moment but will eventually inherit
I'll be taking 25% of my lump sum, the remaining 75% is supposed to give a weekly pension of ? £50 to 55, the 25% spread till retirement will give over £60 a week
hardly ideal but I can live on it – its more than jsa


What I'm looking for is ?? is it as simple as just self financing, am I going to get bills I'm not expecting, will some government/council toad be banging on my door demanding ?? what


Mckneff
Unfortunately the b12 injections didn't work as expected (yes I have the antibodies) thats when they decided I also have ME/CFS. If I do things on my own terms and stop as soon as I feel the exhaustion coming on I get (averaging over the year) about 2 out of 5 days when I can do a few hours of light pottering. Its a bit of a rollercoaster 2013 was a not so bad year 2014 was a bad one.
ESA as I can walk across a room, string three words together and dont think I'm Shergar I've been deemed fit to work

jamesd

The weekly pension part worries me a lot. I'm concerned that the IFA may be looking to sell you a lifetime annuity that is unsuitable for your need, which is an income boost until state pension age. What has the FA said about how that income will be generated?

It's not at all hard. The basic involves just telling a pension provider to pay you the lump sum and a monthly payment of the remainder divided by the number of months until you reach state pension age, plus a few more months as safety margin. You can also tell them to move the investments to cash or a lowish risk income fund or combination to ensure that you don't run out of money before the end of the period. for prudence you should also take just three quarters or so of the calculated amount, again to increase certainty that you'll have the income for the whole period.

It doesn't take an IFA to do this, it's all routine stuff.

I do want to know more about your state pension and potential other future income, though, because at the moment the income you could get over the time until state pension age is higher than I expect people to normally get from the state pension. Which means that I think that taking a lower income until state pension age may be appropriate. Then deferring claiming the state pension so it increases by 5.8% for each year of deferral, boosting your income fro the rest of your life. But to form a proper view on this takes knowing about how much you may get from the state pension and whether there is any other income expected, and how much.

Triumph13

You definitely need to get a state pension forecast. If you have less than the full single tier, eg due to periods of contracting out, then three or four years of voluntary contributions post April 2016 may also be an excellent investment for some of that pension pot.

xylophone

Re new state pension

https://www.gov.uk/new-state-pension/overview

https://www.gov.uk/future-pension-centre

IGraham

Hello again


Yes I have a state pension forecast from 2013 and at that time it was £131.38 for 37 qualifying years. The new full pension seems to be £148.40 for 35 qualifying years.
I dont have and dont expect to have other future income.

xylophone

You might wish to obtain a new forecast under the new rules.