Pension/investment advice

bluenose1

Not sure why but most police officers I know seem to withdraw their maximum lump sum on retirement. Possibly fear of dying young, years of shifts takes its toll and I don't think we were even aware that we could get insurance to cover if he died young.

Plus we definitely wanted some of the lump sum for a big holiday and house improvements. If we had kept £70k back to increase his pension don't think we would be any better off than investing in property. Though I suppose there is always the risk we may have a problem eventually with a tenant etc.

kidmugsy

bluenose1 wrote: »

Though I suppose there is always the risk we may have a problem eventually with a tenant etc.

If we get a Corbyn government, with or without the lovely fellow himself, landlords are probably going to be in for an awful time. I expect they'll have some of their property rights simply confiscated. Indeed, the lamentable Mrs May is capable of trying to make small and stupid steps in that direction. It's been a long time since I reckoned BTL very attractive; I wouldn't touch it with a bargepole at the moment. A house is a sitting duck.

bluenose1

kidmugsy wrote: »

If we get a Corbyn government, with or without the lovely fellow himself, landlords are probably going to be in for an awful time. I expect they'll have some of their property rights simply confiscated. Indeed, the lamentable Mrs May is capable of trying to make small and stupid steps in that direction. It's been a long time since I reckoned BTL very attractive; I wouldn't touch it with a bargepole at the moment. A house is a sitting duck.

Crikey here was me really happy with our property investments:o
I honestly worry more about my DC pension savings taking a nosedive if stocks value reduce than my properties due to the healthy return on them.
By the way I personally would welcome a Corbyn government.

Trinity_Phil

Hi Guys...O.P. here, finally managed to get back on...just a slight addendum to the previous details...my wife has now managed to dig out her pension statements and she is worth more than we thought . It now transpires that her pension pot currently stands at £20k and as she is over 55, we could cash it in straight away, although we are told it is subject to tax ??
Her pension provider has advised us to speak to the tax office to discuss her options on this.
Does this significantly change anyone's recommendations ??

Thanks for all your input people and I am sorry if it has caused a differing of opinion amongst people, but I guess that's what forums are for, lively debate ??

greatkingrat

There seems little point in withdrawing the pension now and paying unnecessary tax if she doesn't need the money immediately. It would be better to leave it and use the money to help cover the period between her stopping work and her state pension starting.

If it is withdrawn over a couple of years and you keep below the personal allowance each year then there will be no tax to pay.

Audaxer

bluenose1 wrote: »

Not sure why but most police officers I know seem to withdraw their maximum lump sum on retirement. Possibly fear of dying young, years of shifts takes its toll and I don't think we were even aware that we could get insurance to cover if he died young.

Looking at the OP's figures, the commutation factor for the pension is pretty good at about 20, which means he gets £20 of lump sum for every £1 of pension given up. There is no point in taking the lump sum if you need the higher income, but the OP says he can afford to live on the lower pension and wants to use at least part of the lump sum to pay off mortgage, buy new car, gifts to daughters etc. So it seems to me the choice is whether to take the full lump sum of £140k and invest the balance of £65k, or take a reduced lump sum of £75k.

kidmugsy

bluenose1 wrote: »

By the way I personally would welcome a Corbyn government.

Beforehand.

atush

bluenose1 wrote: »

Crikey here was me really happy with our property investments:o
I honestly worry more about my DC pension savings taking a nosedive if stocks value reduce than my properties due to the healthy return on them.
By the way I personally would welcome a Corbyn government.

Be very careful what you wish for.

As a landlord, you are his target. not his constituancy

kidmugsy

Trinity_Phil wrote: »

It now transpires that her pension pot currently stands at £20k and as she is over 55, we could cash it in straight away, although we are told it is subject to tax ??

As long as you plan to add a bit to her pension too, here's what to do.

Withdraw 25% tax-free. That's £5k. Of the remaining £15k remove enough each year that she still pays no income tax. Because the Personal Allowance is £11,850 in tax year 18/19, that's another approx £2,850. There you are: £7,850, all tax-free, and the promise of about another £2,850 tax-free year after year.

The reason that you'd also contribute to her pension is so that she can later drawdown more per annum tax-free when she's stopped earning, especially if there's a gap between stopping earning and beginning her State Retirement Pension.

What to do with the £7,850? It's up to the pair of you, but note that along with the further approx £2,850 early in the new tax year (06/04/2019 onwards) you'll have enough for your first £10k gift to a daughter.

But suppose you just recycle. She earns £9k p.a. so she can make a net contribution of 80% of that = £7,200 (pretty close to the £7,850). The bounteous taxpayer makes that up to £9k. So next tax year, 19/20, she can take 25% of £9k in addition to her approx £2,850, giving her £5,100 with no income tax to pay in 18/19. And so forth. It's a wonderful game. Play it before it is banned.

RUBBISH ALERT! Please see post #54 below.

bluenose1

Thanks for the warning Kidmugsy and Atosh. We will have to agree to disagree on our politics.

Tell you what though I would hate to have to rent. I charge just below the going rate and ensure houses in excellent condition etc. I honestly could have rented properties out 20 times over, felt really bad having to decide who we should rent to as lots of decent people looking for good accommodation. Not sure if this is just the area we are in or nationally.
One of the couples we have rented to asked could they put Spider-Man wallpaper up in their sons bedroom as their previous Landlord had refused. As long as it is left in the condition they have moved in I am fine with that as I want them to treat it as their home. We have chosen families whose kids go to local schools as we think they are more likely to stay as we don't want to be changing tenants if possible.

Sorry OP I have gone totally off topic on your thread.
By the way my retired police husband has started up his own gardening round for a couple of days a week as he didn't want set work hours. Think he was worried about set hours impacting on his golf and football and gym!!
He is loving gardening and getting loads of satisfaction from the job, there are a couple of retired police locally in our area who have started doing this which gave him the idea.