What would you do?

singhini

I'm a bit confused, because according to my maths, you don't need to do anything other than get to age 55.


Lets assume its Monday morning and you have turned 55 years old (you have a property with no mortgage worth £x plus £75,000). So you now ring up your private pension company and ask for 25% drawdown = £30,000.


Its now Tuesday and you have a property with no mortgage worth £x plus £105,000 (you live off £15,000 from the £105k for one year)


Next April you take tax free allowance (lets just say its £12,000) and you live off this + £3,000 from the £90k you have (you repeat this for 7 years). [BTW 8 years in total have now passed)


In year 9 you only have £6k left in the pension pot so you need to live off £9k from your savings.


at the start of year 10 you have to live off £15k from your cash savings which will be worth £60k.


So by the age of 65 you will have a property worth £x plus £45,000 and now you will be able to access your pension worth £18,500 per annum (which is plenty for you), and 2 years later you will also activate your state pension aswell


Have I missed something? (I'm genuinely asking as its exactly the same thing I want to do and I'm hoping ive not missed something).

lexington013

kidmugsy wrote: »

Oh !!!!!! "significant": how much is it?

If I take the pension 5 years early (age 60) the acturial reduction is 27%..........!
Taking it one year early (age 60) it's 6.5% reduction.

Dox

lexington013 wrote: »

If I take the pension 5 years early (age 60) the acturial reduction is 27%..........!
Taking it one year early (age 60) it's 6.5% reduction.

That doesn't look quite right. Why isn't five years early 5 x 6.5% = 32.5%?

6.5% for one year early is a bit on the high side these days. Check with your scheme when the early retirement factors were last reviewed/when they will next be reviewed.

justme111

I think singhini has done the maths for you - you do not even need to draw your pension early.
Keeping in mind yo will still have cash savings unused and pension more than you need you may even retire before 55 and live on them for a could if years before 55.
I know people will say that cash loses purchase power so will not be worth the same , that there may be downturn in the investments etc but if you do leave a margin in your calculations so that you do not run them down to O it should be fine. Once in receipt of your pensions post 65 you can replenish the savings if you feel like it.

lexington013

Dox wrote: »

That doesn't look quite right. Why isn't five years early 5 x 6.5% = 32.5%?

6.5% for one year early is a bit on the high side these days. Check with your scheme when the early retirement factors were last reviewed/when they will next be reviewed.

I requested the actuarial reduction a couple of years ago and was sent a table with the reduction in pension from year 1 to year 10.
However I will request a new summary of the "hit" to take pension early.

Dox

lexington013 wrote: »

I requested the actuarial reduction a couple of years ago and was sent a table with the reduction in pension from year 1 to year 10.
However I will request a new summary of the "hit" to take pension early.

I know it feels like a hit (it is!), but don't forget you have the benefit of extra years of pension, paid sooner than expected. The reduction factors are intended to be cost neutral - i.e. by the time you die, you will have received the same amount of pension overall whether you retire early with a lower starting level, or retire at the scheme's normal retirement age with no reduction.

lexington013

Ok requested a new CETV the figure has move upwards to £472,000 it dropped the previous year by 18k. Dependent (partner) pension of 9.6k per year should I die whilst taking the pension or 65.
I'm erring on the side of using my DC pensions and PT work to fund the 55 to 65 gap and then taking the index linked pension from 65 or slight earlier with a penalty.
I'm aware that the FCS is making it more stringent for IFA to sign off DB transfers due to possible miss selling.
Any thoughts on what you would do?