Planning for retirement as a single person - any hints or tips

Number75

I'm divorced, marrying again next year and STILL planning my retirement as if I was single! And I was like that pre-divorce too - you just can never be certain of life. If I'm still married I shall just have a bonus of more luxuries when retired!

You have a limited time to get child maintenance as your kids are 16 and 17. But if he's a high earner in a PAYE job, honestly I'd go straight to CMS and have them sort it out for you. And put all that money (assume plus 40% tax relief as you're a higher earner) into a pension.

If he quits for low paid again, at least he's having to go through that.

Say you got 3 years of £200 a month for the 16yo and 2 years for the 17yo and added 40% relief - that's £15K right there.

ermine

another_casualty wrote: »

I would say, get the mortgage out of the way first and the rest will take care of itself.

Noooo, for God's sake, no!

Paying off your mortgage is what the 25% tax-free pension commencement lump sum is for! Pay the minimum to your mortgage (at these times of low interest rates) and pay all the money you would be paying towards the capital into your pension.

Why? Because the taxman puts back the 20%/40% he stole from you. Target your 25% tax-free lump sum to paying off the capital of your mortgage. From gross income

OP is nearly 44. They will probably be able to take their tax-free lump sum when they are 58. 14 years is a good run to be able to save into a pension to pay down the capital of their house.

Additionally, if you want to retire early, paying down your mortgage means you are skint in the period before you can draw a pension, relative to if you'd used the pension to save for the mortgage, because of the taxable income you will be using to pay the mortgage capital down rather than into your pension.

I got this wrong. I need to work out how and where to invest the PCLS to give me a higher income after I draw my main pension, because I don't need it to pay down the mortgage I don't have. Yes, it feels good to be mortgage-free, but I'd have had more disposable income in the period before I get to 60 if I had carried it and used the PCLS to pay it off.

atush

xylophone wrote: »

Good grief! Did you have a solicitor acting on your behalf?

Have you obtained a new state pension statement?

Had you considered starting a personal pension in addition to your occupational pension?

I agree, you should have gotten some of his pension. I assume they undervalued the pension when splitting the assets.

Basically as a single pensioner you will find the going harder than one half of a couple. Which means you will need to save more.

And if you can, do save the CB for the children to use as university expenses.

atush

OneInTheHat wrote: »

Yes had a solicitor. It was a big battle and in the end we decided to settle to avoid it continuing for another 5 years. I took my solicitor's advice and also went and got another independent solicitor's advice and both gave me the same advice. I don't want to go into the details but we were both high earners and exh quit his job and took a far lower paying job just after we split up. That meant his future earning potential was assessed to be far lower than mine (adding in the fact that he was 10 years older too) so the settlement was always going to be against me. I knew he had done this deliberately and argued that the minute the divorce was done, he would go back to a high paying job. In the meantime, the only people benefiting from us trying to sort out the settlement were the lawyers (can you imagine 4 years of legal fees).

Anyway I agreed the settlement, got divorced. 6 months later he quit his low paid job for a high paid one. He has a new girlfriend - a very wealthy one- and they are v happy. C'est la vie.

I actually bear no grudge now though it's taken me a while to say that. But I must admit it has put me off a new relationship .

I contribute the max I can afford into the company pension to get the tax relief at the moment. Do you think it would be better elsewhere?

No, it wouldnt.

And yes, Divorce settlements can be revisited if material facts change. Esp if there was dishonesty as in this case.

I would at least apply for maintenance for the children now that he is a rich A** again.

atush

ermine wrote: »

Noooo, for God's sake, no!

Paying off your mortgage is what the 25% tax-free pension commencement lump sum is for! Pay the minimum to your mortgage (at these times of low interest rates) and pay all the money you would be paying towards the capital into your pension.

Why? Because the taxman puts back the 20%/40% he stole from you. Target your 25% tax-free lump sum to paying off the capital of your mortgage. From gross income

OP is nearly 44. They will probably be able to take their tax-free lump sum when they are 58. 14 years is a good run to be able to save into a pension to pay down the capital of their house.

Additionally, if you want to retire early, paying down your mortgage means you are skint in the period before you can draw a pension, relative to if you'd used the pension to save for the mortgage, because of the taxable income you will be using to pay the mortgage capital down rather than into your pension.

I got this wrong. I need to work out how and where to invest the PCLS to give me a higher income after I draw my main pension, because I don't need it to pay down the mortgage I don't have. Yes, it feels good to be mortgage-free, but I'd have had more disposable income in the period before I get to 60 if I had carried it and used the PCLS to pay it off.

I agree, that was bonkers advice

Thrugelmir

ermine wrote: »

Noooo, for God's sake, no!

Paying off your mortgage is what the 25% tax-free pension commencement lump sum is for! Pay the minimum to your mortgage (at these times of low interest rates) and pay all the money you would be paying towards the capital into your pension.

Why? Because the taxman puts back the 20%/40% he stole from you. Target your 25% tax-free lump sum to paying off the capital of your mortgage. From gross income

OP is nearly 44. They will probably be able to take their tax-free lump sum when they are 58. 14 years is a good run to be able to save into a pension to pay down the capital of their house.

How secure is the employment, ones health etc. 14 years is a long time in this ever changing world. A lot can happen. Plans need to be flexible and balanced. Speculation is fine until it goes wrong. For some people everyday it does.

ermine

Thrugelmir wrote: »

How secure is the employment, ones health etc. 14 years is a long time in this ever changing world. A lot can happen. Plans need to be flexible and balanced. Speculation is fine until it goes wrong. For some people everyday it does.

There's not that much difference in paying down your mortgage from taxed income, which is a sunk cost, and paying it into a pension, which is sunk in a different way. The capital of your mortgage never gets bigger in nominal terms, keep this in cash in your pension if necessary, you don't have to take stock market risk in this specific case.

Sure, interest rates will be higher in the years to come, if they rise by 7 years then perhaps start to pay down rather than save in the pension. The OP will then be carrying a higher interest rate burden, but they will still have paid down half their capital with a 20% or 40% leg-up from HMRC.

There's no easy way to pay off a mortgage. Take a string of bad luck at any point and you are sunk. But paying off the mortgage early cuts off a lot of options. I did it too early and ended up with an income suckout as a result, that's the price of paying off a mortgage too early in life. I will be richer soon but am poorer between paying it off and getting to my main pension age.

jamesd

If many of those bad things happen the house has to be sold anyway. Some provision for that risk can be made by initially investing within an ISA then moving that money into a pension as you get close to the age at which you can take the money out. The employer contributions and higher rate tax relief can't be deferred until later so getting those does need to be done each year. If the bad things happen the ISA money will be able to extend the time until forced sale, while a mortgage lender would refuse to give you back any extra payments.

Greatest risk reduction comes from the longest possible mortgage term because that has the lowest mandatory monthly payment. Or better still, from interest only.

Nationwide8

As a single person who took early retirement at 55 on a small private pension and savings in the bank from working 30 + years,you get nothing except 25% off Council tax which you get anyway even if working..My choice though to retire so not complaining.

No "extras" and discounts I can find kick in until age 60 ( for the moment ),free bus pass for some,free prescriptions,discounted theatre,cinema tickets ( Odeon have the odd "Senior" over 55 screening for £3 ) etc.Not sure what age you are thinking of retirement but if it's in your 50s it's worth thinking about all that.

Do you have a car ? Would it be essential if retired ? ( Esp if you have reached free bus pass age ),two people contributing to the cost of a car is obviously cheaper than one,no discounts there.
If you retire will you spend more on heating,gas and electric because you're at home more ?,if you switch a light on,switch the heating on, it costs the same for one person as it does for two people sharing the cost.No discount there.

Houses/gardens need more maintenance long run the older they get than a flat ( although you will pay a monthly maintenance charge which can vary a lot on the development,also ground rent usually annually ),and the council tax band probs higher,so would you downsize to retire earlier ?? Or work longer to keep a house going you spend not much time in because you're at work !! ( If you see what I mean )

You have to be brutally honest about what you can live on,if you're a "spender" or can't deny yourself much ( even non essential £2.50 eg,Latte add up ) in any way admit it and if so retire later because of it.When to retire is such a personal thing and it obs depends so much on what £££ you are willing to live on.