Really late retirement plan...

xylophone

If you intend to work full time until you are 70, then you may wish to defer your state pension.

https://www.gov.uk/deferring-state-pension/what-you-get

If you are affected by MPAA, see

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-annual-allowance

You might consider opening a personal pension and paying in as much as you can each month.



post 25

https://forums.moneysavingexpert.com/discussion/comment/73039724#Comment_73039724

Steve_GP220

xylophone wrote: »

If you intend to work full time until you are 70, then you may wish to defer your state pension.

If you are affected by MPAA, see

You might consider opening a personal pension and paying in as much as you can each month.

Wow. My retirement age is officially 66. If I defer by 4 years then, that quite a lot of extra money?

My thing with pensions Vs ISA/savings is that with savings I just get a chunk of cash at the end. With pensions, its all about having an income from whats built up? For me, I doubt I'll live 30 years beyond retirement age - that would make me 100. I kind of hope to enjoy at least some of the cash before I'm too old.

Eco_Miser

Steve_GP220 wrote: »

But a more complex ISA with low medium and high risk investment obviously (can) make money (as well as lose money).

A Stocks & Shares ISA can be a simple as a single fund that invests into most of the world's investable businesses. So can a Self-Invested Personal Pension. There's no need for you to be worrying about the complexity. The fund manager does that.

Have a read of the Monevator blog, starting with http://monevator.com/category/investing/passive-investing-investing/

Shashy

Steve_GP220 wrote: »

My thing with pensions Vs ISA/savings is that with savings I just get a chunk of cash at the end. With pensions, its all about having an income from whats built up? .

I think there's a semantics issue at work here. You can, to a small extent, do what you like with the money built up in a pension. it doesn't have to be used to buy an annuity (which is what I assume you mean when you say 'an income from what's built up'). You've already learnt that it's possible to take a tax-free lump sump etc.

Please have a read of the Monevator website, and get your head around the fact that cash is subject to inflation risk.

Audaxer

Steve_GP220 wrote: »

Wow. My retirement age is officially 66. If I defer by 4 years then, that quite a lot of extra money?

My thing with pensions Vs ISA/savings is that with savings I just get a chunk of cash at the end. With pensions, its all about having an income from whats built up? For me, I doubt I'll live 30 years beyond retirement age - that would make me 100. I kind of hope to enjoy at least some of the cash before I'm too old.

You might live at least 20 years after you retire at 70 even if you don't make it to 100. But whatever happens, if that is your only retirement income apart from the state pension, I don't think you will want to run out of money. Even if you do build it up to £147k by the time you are 70 that could still happen, so best to take an affordable level of income. Whether its in a S&S ISA or a SIPP, most people would leave the £147k, or whatever they have accumulated, invested in the ISA or SIPP when they retire, so the investments will still grow while you are taking income in your retirement.

Steve_GP220

Audaxer wrote: »

You might live at least 20 years after you retire at 70 even if you don't make it to 100. But whatever happens, if that is your only retirement income apart from the state pension, I don't think you will want to run out of money. Even if you do build it up to £147k by the time you are 70 that could still happen, so best to take an affordable level of income. Whether its in a S&S ISA or a SIPP, most people would leave the £147k, or whatever they have accumulated, invested in the ISA or SIPP when they retire, so the investments will still grow while you are taking income in your retirement.

Good point that!

Steve_GP220

Shashy wrote: »

I think there's a semantics issue at work here. You can, to a small extent, do what you like with the money built up in a pension. it doesn't have to be used to buy an annuity (which is what I assume you mean when you say 'an income from what's built up'). You've already learnt that it's possible to take a tax-free lump sump etc.

Please have a read of the Monevator website, and get your head around the fact that cash is subject to inflation risk.

I will certainly look at the Monevator website. Your post here though hits a concern. With a pension I can "to a small extent" do what I want with the money built up. With savings or ISAs I can do it to a large or complete extent? I get you with the inflation risk though. This is what I have to get my head round as you so succinctly put it! I intend to do that fully!

barginfinder

Regarding what investments are available, the S&S ISA and the SIPP are almost identical. In terms of tax, both are free of dividend or CGT. The main difference - which I think you have grasped, is that with the ISA there are no restrictions, you can take the money when you like free of any tax. With a SIPP you can take 25% tax free, the rest is subject to income tax. This means if after the 25% you wanted to buy a boat for 20K, after your 12K per year personal tax free allowance you would pay 25% on the remaining 8K = 2k tax. So if you are saving for a large purchase, the ISA works well. However if you are saving to provide an income on retirement, the SIPP will work better unless you think you will be very well off, the reason being you use up your personal allowance first (the state pension will be around 6K, leaving you able to take 6K every year from the SIPP without paying any tax) and the one very extra large bonus on the SIPP is your contributions get topped up by the taxman : 25% so for every 1K you pay in, the taxman adds £250 - so the value of your SIPP immediately increases by 25% compared to the same amount put into an ISA. I myself am in a similar position, where when I retire I will have a combination of state pension and a small workplace pension. I am trying to balance contributions to a ISA and a SIPP so I maximise the 25% top up on the SIPP contributions, but my retirement income is not so high I will pay a lot of income tax. The money going into the ISA will be to top my retirement income tax free and leave a fund for large purchases / emergencies, so that will be a S&S ISA and a cash ISA. In your position I would start a SIPP straight away but first confirm how much you are allowed and still get the taxman top up - bearing in mind the 4K limit mentioned earlier.

jimjames

Steve_GP220 wrote: »

I will certainly look at the Monevator website. Your post here though hits a concern. With a pension I can "to a small extent" do what I want with the money built up. With savings or ISAs I can do it to a large or complete extent? I get you with the inflation risk though. This is what I have to get my head round as you so succinctly put it! I intend to do that fully!

With an ISA you can do what you want with the money, no tax, nothing.

With a pension you can take 25% as cash but the rest will be taxed as your income so you could pay 40% or more tax on it if you take it in one go. So to an extent you can do what you want but it could cost you dearly if you spend it in one go

IanSt

One thing to remember is that pension contributions receive tax relief. Now it will depend on personal circumstance and how much you can contribute and remain within MPAA, but for instance £125 of pension contributions would only cost a lower rate tax payer £100 from their taxed salary. Thus you could get more into a pension than an ISA from the same amount of salary and it is possible that when you retire that you could get the money tax free - but that would depend on your financial circumstances at that time, how much you wanted to withdraw, and what the tax/pension rules are at that time.