Help! 53 yrs old and needing Pension guidance please

westie660

Hi there

I will try to keep this short, but I fear it is a bit of a rambling story!

Having read through much of the Pension Forum, I am in a bit of a blind panic at the sight of the huge sized Pension pots quoted by so many of you savvy savers. My work situation is not standard, and as I am getting closer to retirement age, I really would appreciate some guidance/suggestions on how to best maximise my Pension income.

My current situation is as follows:

Female 53 yrs old - single/ no children
Own my own home (no mortgage) value approx £200,000
Own a rental property (no mortgage) value approx £90,000 (which gives a monthly income of £550 after costs)

Pensions - 3 very small personal pensions totalling approx 55k
(31k, 19k and 5k values)

State Pension forecast - need to pay another 11 years of NI contributions to qualify for full state pension of £164 (currently shows £115 per week). Also shows a COPE figure of £21.63(??) due to being contracted out of serps for many years (the 19k pension pot)Not sure how COPE works?

Savings - 20k Premium bonds
35k S&S ISA
30k Cash deposits

I am currently working for 8 months of the year only as an outdoor instructor, and then spend the other 4 months of the year during Winter in Australia, where I help to care for a disabled relative. This is certainly not an ideal work situation, but one that can't really be changed at the moment - I am committed to the time in Australia and of course am not able to earn while there. So my current income is approx. £16,000 per year from the seasonal employment plus rental income from the second property. This has been my work pattern for the last 8 years, and as I don't earn for the full tax year, I have not been getting NI contributions towards State Pension. My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension) :eek:

So I would love to know if anyone has any thoughts or suggestions to offer based on these numbers and the info provided. How would I attempt to create the best possible retirement income from this situation?

Thank you so much for reading my rambling post - As I said, I am in a complete panic about the future and would hugely appreciate any input.

AlanP_2

westie660 wrote: »

Hi there

I will try to keep this short, but I fear it is a bit of a rambling story!

Having read through much of the Pension Forum, I am in a bit of a blind panic at the sight of the huge sized Pension pots quoted by so many of you savvy savers. My work situation is not standard, and as I am getting closer to retirement age, I really would appreciate some guidance/suggestions on how to best maximise my Pension income.

My current situation is as follows:

Female 53 yrs old - single/ no children
Own my own home (no mortgage) value approx £200,000
Own a rental property (no mortgage) value approx £90,000 (which gives a monthly income of £550 after costs)

Pensions - 3 very small personal pensions totalling approx 55k
(31k, 19k and 5k values)

State Pension forecast - need to pay another 11 years of NI contributions to qualify for full state pension of £164 (currently shows £115 per week). Also shows a COPE figure of £21.63(??) due to being contracted out of serps for many years (the 19k pension pot)Not sure how COPE works?

Savings - 20k Premium bonds
35k S&S ISA
30k Cash deposits

I am currently working for 8 months of the year only as an outdoor instructor, and then spend the other 4 months of the year during Winter in Australia, where I help to care for a disabled relative. This is certainly not an ideal work situation, but one that can't really be changed at the moment - I am committed to the time in Australia and of course am not able to earn while there. So my current income is approx. £16,000 per year from the seasonal employment plus rental income from the second property. This has been my work pattern for the last 8 years, and as I don't earn for the full tax year, I have not been getting NI contributions towards State Pension. My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension) :eek:

So I would love to know if anyone has any thoughts or suggestions to offer based on these numbers and the info provided. How would I attempt to create the best possible retirement income from this situation?

Thank you so much for reading my rambling post - As I said, I am in a complete panic about the future and would hugely appreciate any input.

First Thing - Don't Panic :cool:

You are in too bad a position with 2 properties paid off, some pension savings and some other savings, there are many worse off than that.

Second Thing - Don't worry about what others have got, these boards generally attract two types of people. Those who are interested in the topic because they're focused on saving for retirement and have larger post to their name. The second group have less and are looking for suggestions on what to do.

OK, so when do you want to stop work and start drawing an income from "savings" whether pension or non-pension?

How much do you needs / want in retirement?

Are you self-employed or employed? If employed is there an employers pension scheme you can join?

You may be able to make up the short NI years by paying voluntary contributions, not sure how it works when they are part years but someone will be along who knows.

You could potentially cycle some of the non-pension savings through a pension to gain the tax relief which might help a bit but it would then be locked away until 55.

The key is what do you want / need and when by as that objective sets out what you need to plan for.

xylophone

I have not been getting NI contributions towards State Pension.

https://www.litrg.org.uk/tax-guides/employed/what-national-insurance-do-i-pay-employee

https://forums.moneysavingexpert.com/showthread.php?t=5774173

https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf

Albermarle

As already said the situation could be worse, some people have no assets at all .
Of course would be good if you can top up NI contributions and add to your savings/pension but you say >

My current income level doesn't leave me with any spare to contribute to the private pensions, so they are all dormant at the moment (and no NI payments to state pension)

So sounds like you will have to increase your income/decrease your expenditure or just accept the status quo.
Perhaps longer term you could downsize your home and sell the other property ( will be more difficult to manage as you get older) and use the capital to generate an income.

crv1963

Definitely don't panic.

You're in a stronger position than a lot of others. You need to work out a few basics- when you want to retire, how much income you will need and then how to meet any shortfall between need and projected income.

Look at your current pots- is any of it going to give an income- no matter how small, then is any of this index linked? Then look at the cost of making up your NI shortfall first as boosting SP would seem a good objective as it is index linked or at least raised each year and not dependent on the markets.

Then look at either raising income level or cutting costs. Use extra income/ saved monies to pay the NI shortfall. If neither is possible then look to transfer from savings premium bonds to NI contributions while that is still possible.

Full SP+ rental income should come close to your current income.

tacpot12

If you have been earning £16K for eight months work then you have paid enough NI to qualify for a state pension in that year, and so I would expect this to be the case for the previous seven years.

Have you considered taking in one or more lodgers and using the extra income to fund a pension? You are allowed to receive upto £7500 a year in rent before paying tax under the Rent a Room Scheme. Check your eligibility for the scheme here:

https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2017--2

You should make a budget as to what your living expenses are likely to be at retirement. I would do this in "today's money" and figure out what your retirement income might be on this same basis. Doing so on a spreadsheet (e.g. Microsoft Excel or Google Docs Spreadsheet) will allow you to look at the effect of different retirement dates. It's not clear whether you will be able to stop travelling to Australia by the time you retire, but I would only expect the cost of airfares to rise, so this may not be an expense you can afford if you want to give up work entirely.

The small pots would be expected to grow between now and when you draw on them; the best idea might be to plan to draw on each one in turn until they are exhausted.

westie660

Thank you all so much for the suggestions - and I am very glad to hear that you don't yet consider it panic worthy!

My preference of course would be to retire before state pension age (possibly 60). The nature of my work means that I don't know how long physically I will be able to do it. I could try to find alternative employment, but that also gets harder to find as one ages! So yes, is there any way you consider retirement a possibility before state pension?

I would like to be able to retire on about 18k ideally, but could possibly manage on less if necessary. Any other suggestions?

I will certainly look into making NI contributions for missing years, but someone mentioned that this is only worth doing for years since 2016? Not sure why? That would only give me 2 more years to add.

Again, thanks so much for replies - very much appreciated.

crv1963

You have 85k savings one way of boosting them may be to transfer some of this into a personal pension of some sort possibly a SIPP. You can put 100% of earnings (not rental income) each year so your 16k- 6.6k rental income= 9.4k pa this would be topped up by HMRT to become 11280 pa in your pension pot.

xylophone

I will certainly look into making NI contributions for missing years, but someone mentioned that this is only worth doing for years since 2016? Not sure why? That would only give me 2 more years to add.

Read the Royal London link in my post above.

Mnd

I don't think anyone addressed the COPE query, you are right, ignore it in your calculations. It just a indicator of what you contracted out pensions may be worth

squirrelpie

Just to confirm: where are you planning to retire to? Here, Australia or somewhere else? Since that will affect your plans. I think everybody has been assuming you will retire here.