Getting my pension at 55

1st_petrolhead

Hi

I was made redundant March last year and got enough redundancy to last at least a year.

Now its time to think about my pesions as I have just turned 55 and no intention of working. I have 2 totalling £137K with Aegon Legal and General and now thinking about whats the best option.

Cashing in is not a good idea due to tax
I dont want an anuity as I dont want to loose the pot.

So that leaves drawdown. An adviser that works for Chase De Vere and associated with the my pension wants about £4k to sort my pension out which seems a big chunk so I thought I would ask hear first.

I assmune with drawdown I have a couple of choices, stay with my current pension provider and move to a different fund? Move the lot to a new fund?

What type of fund should I be looking at?

Good_bad_and_ugly

£4000?

Jeez.

If you're not working any longer, you should consider the impact of sequential return risk. You can't afford big losses, especially in the eRlier years so consider researching low volatility funds. That's the first thing to address.

1st_petrolhead

Sequential return risk?

Thrugelmir

1st_petrolhead wrote: »

I have 2 totalling £137K with Aegon Legal and General and now thinking about whats the best option.

That's not a lot if you are considering no longer working and have no other sources of income until you receive your state pension.

Good_bad_and_ugly

1st_petrolhead wrote: »

Sequential return risk?

Here you go, aka pound cost ravaging.

http://moneyover55.about.com/od/investmentincome/a/Sequence-Of-Returns-Risk-Misunderstood-By-Many-Retirees.htm

xylophone

Here you go, aka pound cost ravaging.

His income will be ravaged?:rotfl:

Pound cost averaging?

You will need to find out what options your pension provider offers for managing your pension.

https://www.fidelity.co.uk/investor/help/forms-literature/literature/retirement-managing-income-form.page might be worth a read.

Pension Wise might help. https://www.pensionwise.gov.uk/

Re new state pension https://www.gov.uk/calculate-state-pension

Good_bad_and_ugly

Pound cost ravaging.

http://www.telegraph.co.uk/finance/personalfinance/investing/11210093/Invest-100000-in-shares-and-take-an-annual-income.-How-long-till-youre-bust.html

PeacefulWaters

1st_petrolhead wrote: »

Hi

I was made redundant March last year and got enough redundancy to last at least a year.

Now its time to think about my pesions as I have just turned 55 and no intention of working. I have 2 totalling £137K with Aegon Legal and General and now thinking about whats the best option.

Cashing in is not a good idea due to tax
I dont want an anuity as I dont want to loose the pot.

So that leaves drawdown. An adviser that works for Chase De Vere and associated with the my pension wants about £4k to sort my pension out which seems a big chunk so I thought I would ask hear first.

I assmune with drawdown I have a couple of choices, stay with my current pension provider and move to a different fund? Move the lot to a new fund?

What type of fund should I be looking at?

How much a year do you need to live off with a reasonable degree of comfort?

Good_bad_and_ugly wrote: »

If you're not working any longer, you should consider the impact of sequential return risk. You can't afford big losses, especially in the eRlier years so consider researching low volatility funds. That's the first thing to address.

I'm sure I've just seen a long thread where you've slated somebody for failing to ask additional questions before answering.

jamesd

It isn't necessary to pay an adviser to do this, it's entirely possible for you to do it yourself.

If you want the income for life the commonly used guideline that has a low chance of a substantial fall in income later is 4% of the pension pot's initial value, increasing by inflation each year. That would mean £5,400 a year.

If you have other pensions that will start to pay out later from past jobs please describe them, the amounts and when they start. Please also say what your state pension would be and when that starts.

I'll assume in 12 years and an £8,000 state pension. I'll also assume 3% inflation and 4% investment growth after costs before inflation (so 7% total). In that case you could take around £14,400 income until state pension age then nothing topping up the state pension long term. Or you could take around £11,000 until state pension age then reasonably expect to be able to top up your state pension by another £3,000 to give you an ongoing 11% plus inflation income for life, with around £76,000 pension pot still around at state pension age. If it is still possible to defer the state pension you could increase that long term income by deferring. I'm assuming that you are content to have some decrease in value to generate income while alive.

The calculation until state pension age doesn't use the 4% guideline because there is deliberate drawing on capital to boost income. The calculation from state pension age does. I also ignored your redundancy money and any other assets, assuming that you need the pot to provide all of your income need from day one. To do this more properly the redundancy money and other savings should be added to the initial pot.

To reduce risk you should keep one year of the planned income from investments in a savings account and draw on that to provide your regular income. Have income from savings and investments paid into that account and top up periodically with capital sales. Do not do capital sales just after a market downturn. the purpose of this is to increase the overall success rate by avoiding you being forced to sell during a downturn, without it immediately affecting your income.

To reduce overall risk I suggest that you invest the pension lump sum into peer to peer lending using at least three different peer to peer firms with different types of lending customer. Interest rates from around 5-12% are available and you can use this to provide around £2,700 of the income (assuming 8% average interest rate). For the remainder you would need to draw from the pension, all of this will end up being within your personal allowance or tax free interest allowance.

Investments beyond P2P for its relative stability and decoupling from the stock and bond markets could include some commercial property funds, with global, European or UK equity funds providing the longer term growth needed to keep up with inflation.

Good_bad_and_ugly

jamesd wrote: »

To reduce overall risk I suggest that you invest the pension lump sum into peer to peer lending using at least three different peer to peer firms with different types of lending customer.

:eek: .............

jamesd

Just what image do you have of peer to peer?

Maybe you don't know that the leading players either have protection funds with high reliability, do asset-backed lending or both, all of which substantially reduces the chance and potential amount of a capital loss on a loan. Besides that there's the spreading of loans over multiple borrowers and multiple platforms. They are also FCA regulated and have mandatory recovery programs to keep the money coming if the platform fails. Even if somehow all of that failed and all money in one platform was lost that'd still be a loss of just 8.3% of assets if the at least three platforms guidance was followed.

Contrast that with the typical stock market drops of 20% two or three times a decade and 40% once or twice a decade, creating a one year or so period where selling capital is a bad move after each, perhaps a bit less, perhaps a bit more. This plan has to survive at least two 40% drops in planning and one way to do that is to reduce investment volatility with P2P and commercial property investing.