Seen an FA finally! This is the plan to retire early....anyone any opinions?

Paul_Herring

58 is the minimum age you can access pension funds

No, it's 55 at the moment (absent corner cases like terminal illness,) and even I want to retire before then.

Yes, there have been plans mooted to move access to personal pensions to State Pension Age minus 10 years, but nowhere near enacted yet.

But still - you seem set on retiring early, yet you appear to be constraining yourself to the earliest being whenever you can access your private pension (be it 55 as it is now, or potentially 58 by the time you get there.)

Paul_Herring

dunstonh wrote: »

What 5%?

I suspect confusion between 20% and 25% being used to describe the amount handed back to the taxpayer when money is put into a pension/LISA, depending on what number is used as the divisor.

FIRSTTIMER

I don!!!8217;t get why the barrage of negativity.

There is no point in telling me it!!!8217;s 55 when it!!!8217;s not for me and never will be. The earliest I will be able to access pension funds will be 57 and 58 in the worst case scenario as it stands.

Surely early retirement is subjective as to what one person wants. If i was a footballer I!!!8217;d have retired long ago. But at the min I want to retire when the earliest is for pension benefits.

I also don!!!8217;t get why I would opne a LISA capped at 4K and then if I need a SIPP have that in addition, then at 50, in the worst case scenario have to open a SIPP if not already done for the next 8 years when most growth is going to come on top of previous growth - a SIPP invested in for 23 years rather than LISA for 15 years and then a SIPP for 8 years and then. Then have the SIPP at 58 and then the LISA at 60.

The 5% is indeed the extra rebate via a LISA.

stoozie1

Hi OP,

If you wanted to retire earlier than 58, you could use ISAs as a vehicle to bridge the gap?

FIRSTTIMER

Brilliant - I think that is absolutely why I have ended up splitting between the ISA and the SIPP. I was quite happy after seeing him. It was based on a salary circa £45k-£50k.

The main bit I took away was the fact he said I have been fortunate to have paid into a now closed defined benefit scheme since aged 18 (private sector company pension) that I can transfer out when I want and the CETV value is good. And a defined benefit scheme (government TPS/USS) that i cannot. He said whatever happens house moves etc or whatever life throws at you, salary increases or decreases, maintain the £450 and the 20% into pension and I should be very comfortable in retiring as soon as I hit 57/58. I have fixed premium income protection until age 65 as well as fixed premium Life with CIC until age 70. So if I had ILL health I could maintain things until retirement or continue to pay into relevant external schemes if need be.

There is no other safety net I need which is good to hear actually. Things to review constantly are how the self funded funds are increasing/decreasing and the platform fees in addition to the CETV value. I certainly feel more savvy in what!!!8217;s what pension/future wise.

FIRSTTIMER

The income protection is in case I decide to continue working until 65 and across the whole 30 years that I could end up paying all fixed premiums total is only £8200 which works out just over 3 months payout which is well worth it considering I could have it until 65.

Thrugelmir

FIRSTTIMER wrote: »

3. The old DB scheme is projected to pay out £4-5k annually at age 60. He said the rise is RPI up to max of 5% annually in my scheme. The CETV is likely to give me a much bigger return if say it!!!8217;s 100k in 20 years. If I was 60 taking 5k annually I would need to live well into 15-20 years to get the equivalent CETV value.

Don't buy this argument. I'd let the dust settle on the era of QE first. From the end of this year. We'll start to see the impact of the patient being taken off the drip feed of cheap money.

Alexland

FIRSTTIMER wrote: »

I also don!!!8217;t get why I would opne a LISA capped at 4K and then if I need a SIPP have that in addition, then at 50, in the worst case scenario have to open a SIPP if not already done for the next 8 years when most growth is going to come on top of previous growth - a SIPP invested in for 23 years rather than LISA for 15 years and then a SIPP for 8 years and then. Then have the SIPP at 58 and then the LISA at 60.

The 5% is indeed the extra rebate via a LISA.

I still think you are missing the S&S LISA opportunity. Sure it won't cover the years before 60 so you might have to make other arrangements for that but the LISA will give you a 25% boost on up to £4k a year with no tax to pay on withdrawal (unlike a pension which a proportion will be subject to tax). Sure you can only contribute to a LISA until 50 but those contributions will continue to be invested and grow until you are able to withdraw from age 60.

On the initial boost, saving 20% income tax is exactly the same as a 25% bonus - do the maths there is no 5% difference. £100 is taxed to £80 which with a 25% bonus becomes £100 again.

So with a LISA the same amount of money is going into the account as basic rate tax relief and it can be invested in the same products (although personally I don't see the point of VLS100 when there are better passive 100% equities funds at lower cost) but critically there is no tax on withdrawal.

Alex

FIRSTTIMER

agree quantitative easing needs to settle - hence continual review of the DB and CETV

kidmugsy

FIRSTTIMER wrote: »

LISA is too restrictive. Pay into it until 50 and then get it at 60. What happens for 10 years?

Bonkers question: you pay into a SIPP.

FIRSTTIMER wrote: »

SIPP is much better as can drawdown from 58 (probably) and pay into it all the time and pay in more than 4K per year if needs be. The 5 percentage extra you get back on a LISA is not worth it.

More bonkers. That makes sense only if they are mutually exclusive; they aren't.