Retirment in 2016 advice please

RickyB2000

saver861 wrote: »

Ah right. You are working on a 20:1 ratio. Not sure you would get that ratio anywhere. Its usually about 12:1 max but there will be different rates in different schemes.

You are correct though that op would need to consider tax implications against index-linking etc.

I had the same option when I retired to take some additional lump sum for reduced annual pension. I declined, even with paying tax and allowing for investment return, I figured it would be around 14 years when I reach breakeven. As there is a good chance I was going to be drawing my pension for more than 14 years I concluded it was not a good option. The ratio was 12:1.

Agree, I was being generous. But it was meant as an illustration of what to consider when deciding (with easy numbers for me to work with ). If we had some real numbers to work with, a more accurate picture could be formed. I agree, 14 years doesn't feel enough to take the lump sum. Unless in poor health, and even then there is probably a spouse pension. I would personally be very wary of taking any lump sum if I was needing it to cover essential bills unless the break even point was 30 - 35 years (retiring at 65). On the other hand, if I have lots more income than I really need at retirement, I may take the lump sum to enjoy at the start of retirement even if financially it isn't the best approach.

Another thing to throw into the mix is the impact of taking a lump sum and means tested benefits. You may find the lump sum has an impact on benefits you can claim, meaning you are actually worse of taking the lump sum and the break even point is even lower.

xylophone

Your husband's pension is tiny so it is not surprising that it is paid quarterly - I am assuming that yours is not likely to be as small?

What does your FSP offer?

Have you looked into how much you will need to pay in rent for the area you want?

patanne

As you have deferred your state pension for 3 years @ 10% per year, it should have increased from the basic (in april 16) £119.30 to £155 per week so that would be £600 every 4 weeks unless you have several years missing. You really need to get it all in writing. They seem to not understand the question you are asking sometimes when you ring and are assuming you are asking about your basic state pension. Follow the link someone gave above and get the official version.

Taking the deferred part as a lump sum is usually not a good thing to do unless you are in poor health.

atush

patanne wrote: »

This sort of deduction is only possible for someone with fairly high employment expenses. This is unlikely to be the case here. I would assume that being in a tied property rent/bills free means 'living on the job'. The only extra will be no NI to pay. The OP has also got to fund the extra rent & other bills after their retirement.

OP you really need to sit down and work out some numbers. If you are saving lots each month now, then it shouldn't be hard to figure it all out but if you are living up to your income now then it is different. At the moment only you know that.

I totally agree, esp if this person has not bought a house to live in in the future, nor has a council house.

Living in private rented accommodation is likely to be very expensive, and to rise quickly in cost in future.

xylophone

Living in private rented accommodation is likely to be very expensive, and to rise quickly in cost in future.

They might be eligible for a Housing Association/Council property?

atush

they might? or they might have to spend many years on a list?

Who is to say w/o the information?

doloresdavies

I work for a Housing Association. I can't be re-housed by them. I can ask the Council when I've had my Redundancy date, as I would be classed as Homeless. But I would prefer to rent privately, I am watching Rightmove daily. I don't get any Housing Benefit on my Council tax Bill. I will get almost a year's salary in Redundancy pay. Someone said earlier about asking the CAB, probably a good idea as I don't understand the 'technical' terms and observations in some of the earlier replies. I will ask the FSP people about Index-linked. I could trust myself to have a Lump sum however big/small and not touch it unless in an emergency.
Thanks to all of you and Happy New Year.

atush

you prefer to rent privately? when the rate of rent inflation is far above normal inflation?

yes, you should speak to CAB. Do be aware, that any redundancy over 30K it taxable, so i'd be looking to put any over that intoa personal pension of some kind. And draw it when needed, 25% tax free and the rest as income- when needed.

patanne

This is not advice I normally care to give but if you may be entitled to some benefits such as housing benefit or pension credit you would not be wise to take any pension as a lump sum as you will need to spend a portion of it before they will pay those benefits & if you take the opportunity to 'blow it' they may decide to count it as deprivation of assets and work on the assumption that you still have it.

xylophone

This is not advice I normally care to give but if you may be entitled to some benefits such as housing benefit or pension credit you would not be wise to take any pension as a lump sum as you will need to spend a portion of it before they will pay those benefits & if you take the opportunity to 'blow it' they may decide to count it as deprivation of assets and work on the assumption that you still have it.

In this particular case, as the OP is to receive a year's salary as a redundancy pay off, a state pension and a DB pension, and is married with spouse also receiving pensions, it would seem unlikely that she would be eligible for means tested benefits?

I am also wondering why she considers that she would not be eligible to apply for a housing association property on the basis that she would pay full rent for it.