Pension release at 55 advice please.

AnotherJoe

tony_coleman wrote: »

Hello. I have recently become redundant.

I will be 55 next month and I am thinking about taking some money out of my pension pot, which is not big and then use the money to set up working for myself.

I am aware of 25% being tax free and the rest taxed but want to know if my redundancy money will be affected by this.
My redundancy payout is £10.000.

Thank you. Tony.

If you can, pay the £10,000 into your pension (or opens new one) , that will be bumped up to £12,500 or more if you are a high tax rate payer. When you withdraw that, 25% of it will be tax free, and if you have no other earnings or pension when you withdraw it, you won't pay any more tax as that will be less than your personal allowance. So that's a free £2,500.

atush

tony_coleman wrote: »

Hi Atush.

I agree with you it does sound bonkers but its a gamble im prepared to take. If I were to leave my pension pot until I retire the monthly payback would not be much. At present I really could do with the money and if working for myself does not work out then I will just go and find a job that pays a basic monthly wage.

How are you working out the pension 'wouldnt pay much'? It will pay far far less if you plunder it now. And dont pay in. Pensions are better than having nothing, which is what you could be left with if you take it all now.

I say, look for another job while planning some self employed business or find a business you can start up with 15K- 10K from pension, 5K from redundancy, 5K to live on?

maximumgardener

atush wrote: »

How are you working out the pension 'wouldnt pay much'? It will pay far far less if you plunder it now. And dont pay in. Pensions are better than having nothing, which is what you could be left with if you take it all now.

I say, look for another job while planning some self employed business or find a business you can start up with 15K- 10K from pension, 5K from redundancy, 5K to live on?

must agree 100% really here . you rushing in to empty your pension pot now is probably not a great move.

can you not get part time work or other work and ease into your new business whatever that is .?

also keep paying into your pension and try to increase that

tony_coleman

Thanks Atush.

I think I like your idea better than mine !