A frugal early retirement ....

p00hsticks

marvinandroid wrote: »

Suppose all things are relative but associated with moving from a relatively high income and low spend lifestyle to one where the balance is more real!

If you are currently actually spending more than your projected £25k income, then I suggest you try reducing you expenditure for a period to confirm that you are comfortable with your projected pension income.

marvinandroid

Fantastic advice thank you. I've been paying extra into my civil service pension for over 15 years and hadn't considered a private pension so that feels like a blind spot on my behalf and I will look into it. is it as easy as investing now in a PP with tax relief and then getting the benefit a year later (I'm a 40% tax payer)? Currently, savings are dotted around various tracker and cash ISAs - the latter almost pointless in current low rate environment.

xylophone

Check state pensions for starting amount

https://www.gov.uk/check-state-pension

See

https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

Consider information here

https://forums.moneysavingexpert.com/discussion/5580163

Triumph13

jamesd wrote: »

Combined work and state pensions of £51k and plenty of savings means that you've prepared well for retirement, time to start enjoying it.

That should be £41k not £51k, but either way it is still well ahead of your target spending figure of £25k. For that reason, I would take the DBs now rather than waiting. You know you'll be quids in after state pension age anyway so your savings are much more valuable to you now than the would be in the future.
Assuming those DBs are fairly evenly split and so you are using up both personal allowances, then £150k of your £200k savings and lump sums allows you to spend £35k not £25k for the period up to state pension and £37k after that if you pay your class 3 to get up to the full amount. Congratulations, you have reached your destination.

atush

Yes, using a PP or sipp will be a great idea as a 40% taxpayer.

100 into a pension will only cost you 60.

westv

jamesd wrote: »

Not worth waiting for the NPA of the career average bit, just take the actuarial reduction on that.

Why would you not wait though?

RADDERS

We have both just finished work in August, hubby retired on final salary and I just finished. Hubby 56 me 53 we are mortgage free and have savings. I cannot get my DB pension until 62 and SP until 67 so all our assumptions had to take this into account.
We also have a motorhome, bought a brand new one in September and set off for the winter in Spain, what an adventure, loads of cycling and just pottering about.
It was a huge decision as I receive no income but you never know what is around the corner, my advice is don't think too much just do it :j
Radders

jamesd

marvinandroid wrote: »

... hadn't considered a private pension so that feels like a blind spot on my behalf and I will look into it. is it as easy as investing now in a PP with tax relief and then getting the benefit a year later (I'm a 40% tax payer)? Currently, savings are dotted around various tracker and cash ISAs - the latter almost pointless in current low rate environment.

Once you're 55 you can take out the tax free lump sum as soon as the money is in your pension account. As little as a few hours.

If you take even a penny from the taxable 75% your annual limit for pension contributions will be reduced to £4k a year for life. There's a workaround for that. You can take all of the money out of three pension pots per lifetime worth up to £10,000 each using the "small pot rule". It must be all and must be no more than £10k per pot.

When you tell HMRC how much gross ended up in the pension they will either adjust your tax code or pay you lump sum higher rate relief, depending on how much it is. You only get 40% relief on the part of your income on which 40% tax is due.

Since you're paying at least some 40% income tax you will save at least 40% on the portion covered by the tax free lump sum and 20% on the rest because it'll be taxed at most at basic rate on the way out. If you wait a while to take the work pension the portion covered by your personal allowance will also have no tax due.

There are restrictions on how much tax free lump sum money can be recycled into new pension contributions.

jamesd

Triumph13 wrote: »

That should be £41k not £51k, but either way it is still well ahead of your target spending figure of £25k. For that reason, I would take the DBs now rather than waiting. You know you'll be quids in after state pension age anyway so your savings are much more valuable to you now than the would be in the future.

The savings mean that a higher income can be taken immediately. There's no need to throw money away by taking the pension any sooner than necessary. All you achieve by taking the pension sooner is wasting the part of the savings needed to match the given up income.

If there's a desire to have even higher income now that can be achieved by borrowing against the future income.

It's only those who lack the resources to do something more beneficial who end up forced to take the pension before NRA.

In this case there's plenty of money around and the best way to deal with the risk worries is to get the higher pension. With no need to accept a lower income taking the pension at NRA is the way to go.

jamesd

westv wrote: »

Why would you not wait though?

Most of the working time will be in the final salary part of the pension with I assume age 60 normal retirement age. The last couple will be in career average unless included in the transitional protection. It's not worth delaying most of it by seven more years just to avoid the actuarial reduction on a couple of years worth and there's no ability to take the two parts at different times.