Taking Pension out at 55

dunstonh

farquarpigmix wrote: »

I dread waiting to 66 to get a pension when old & knackered. As I said any government will increase the retirement age again.

66 today is a bit like age 46 in the 1970s. They managed to get to 65 back then. So, an extra year for you is not a big deal when you consider your life expectancy.

However, if you dont want 66, then plan to retire earlier by funding it appropriately.

seven-day-weekend

Linton wrote: »

If you plan to be old & knackered at 66 perhaps yours is the best strategy but most people arent at that age unless they have had a life of very hard work. Life expectancy is around 87 so you have a 50% chance of living longer even then that. WIth a fair wind you could well remain healthy and active until your 80's.

My dad was 89 and still cycled every day, was never ill. He died by being hit by a car while he was crossing the road. Otherwise I'm sure he would have made his century easily (and still riding his bike).

I have a friend in his 60s who regularly (like several times a week) knocks up 50 miles on his cycle.

My own husband, aged 67, recently did 98 press-ups in one minute at the gym.

Decrepit indeed!

However, early retirement is nice if you can do it, we both retired in our 50s and lived in Spain for eight years on my husband's (reduced) Teachers' Pension.

slopemaster

seven-day-weekend wrote: »

My own husband, aged 67, recently did 98 press-ups in one minute at the gym.

That is well impressive!

seven-day-weekend

slopemaster wrote: »

That is well impressive!

Yes, the only person who had done more was a young personal trainer.

Don't ask him to do squats though - his arthritic knees won't let him! :rotfl::rotfl:

xylophone

I have 2 pensions just laying there. 1) Approx £8,000 2) Approx £15,000

Golden (nest) eggs? Well, bronze perhaps....:D

lvader

This could be even worse then it looks, they could be talking about the transfer value of DB pensions. :rotfl:

mgdavid

what concerns me about this type of attitude is the possibility of ending up living on benefits in older age paid out of the taxes of the prudent, i.e. me! :mad:

jamesd

farquarpigmix wrote: »

As explained. 66 is when am very old & knackered. Would like to enjoy life well before 66. Would like to spend my pension money before I retire 6 feet under.

Your plan reduces the amount that you get when you are younger. If you want to get out as much as you can while young you should do something like this instead:

1. Take out the £23,000.
2. Make a pension contribution of £17,600 net. Basic rate tax relief will be added to increase this to £22,000 in the pension.
3. Spend whatever is left from the lump sum.

4. Sometime after 6 April 2016:
a. take out a 25% tax free lump sum of £5,500. Make a pension contribution of £4,400 net. This will be increased to £5,500 by the pension tax relief. Spend the remaining £1,100 from the tax free lump sum.
b. Put the remaining £16,500 into flexible drawdown and ask for a monthly taxable income of £1,375. You will receive net payments of £1,100.
c. Set up a monthly direct debit or standing order to pay £1,100 into the pension using the £1,100 monthly income you're getting. This is grossed up to £1,375 by the pension tax relief, making £16,500 a year. Combined with the £5,500 from the lump sum this totals gross £22,000 into the pension during the year.

5. Leave this running each year from now on.

You're now getting an extra £1,100 tax free each year to spend and you can still take out the rest whenever you retire.

However, as ffacoffipawb mentions below, you can't actually pay in more than £10,000 gross after you take more than the initial 25% tax free lump sum, so you can either choose to get a bigger tax break by taking out and recycling only the 25% or reduce the amounts paid in so that you get £500 a year tax free instead.

ffacoffipawb

jamesd wrote: »

Your plan reduces the amount that you get when you are younger. If you want to get out as much as you can while young you should do something like this instead:

1. Take out the £23,000.
2. Make a pension contribution of £17,600 net. Basic rate tax relief will be added to increase this to £22,000 in the pension.
3. Spend whatever is left from the lump sum.

4. Sometime after 6 April 2016:
a. take out a 25% tax free lump sum of £5,500. Make a pension contribution of £4,400 net. This will be increased to £5,500 by the pension tax relief. Spend the remaining £1,100 from the tax free lump sum.
b. Put the remaining £16,500 into flexible drawdown and ask for a monthly taxable income of £1,375. You will receive net payments of £1,100.
c. Set up a monthly direct debit or standing order to pay £1,100 into the pension using the £1,100 monthly income you're getting. This is grossed up to £1,375 by the pension tax relief, making £16,500 a year. Combined with the £5,500 from the lump sum this totals gross £22,000 into the pension during the year.

5. Leave this running each year from now on.

You're now getting an extra £1,100 tax free each year to spend and you can still take out the rest whenever you retire.

Dont think he can do that. If he takes out more than the 25% PCLS then future pension contributions are limited to a reduced annual allowance of £10,000.

farquarpigmix

mgdavid wrote: »

what concerns me about this type of attitude is the possibility of ending up living on benefits in older age paid out of the taxes of the prudent, i.e. me! :mad:

I have worked since I was 15. I have more than paid my dues. :mad: