How Are You Funding Gap from Retirement to State Pension?

swindiff

Tax free lump sum from my DC pension which is linked to my DB pension will more than cover the years between 60 and 67 for me. I am currently 48 and paying 25% of my salary into the DC part of my pension to make sure this is the case. Because the pensions are linked I get 25% tax free on the entire pension DB+DC combined which is a very nice feature

SuiDreams

I'm planning on drawing down more from my DC pension until I reach state pension age, then reduce the rate I draw down from when I start receiving state pension. I have put this into a spread sheet and it works. I am trying to build a pot in a S&S Isa to fund an earlier retirement as I may not be able to withdraw from DC scheme until 58 (dependant on government changes).


I am hoping to reduce down to part time working in the years leading up to retirement and believe that income will be sufficient as I won't need to may as much into savings or pension AVC's at that point.

justme111

CRV, did not you have already enough to achieve your Number?

Anonymous101

My tactics will be slightly different as I plan to "retire" in my 40's. Around 10-12 years from now.

For me its a balancing act between my DC Pensions and S&S ISA as obviously I won't be able to draw any funds from Pensions until I'm at least 55.

I'm actually planning on not being able to access them until I'm 60 as a factor of safety for the time being. As I get closer to having sufficient savings I'll reassess and could end up paying much more into my pension as this is the most tax efficient way to go for now.

crv1963

justme111 wrote: »

CRV, did not you have already enough to achieve your Number?

I could go but Mrs CRV would still need to work, for us not a situation we want, we want to go at the same time. I am trying to balance two aims- i) that Mrs CRV has a large enough pot to draw against up to the PA and ii) if I were to die first, her pot from i) plus the survivors benefit from my pension would ensure she could remain retired but not in poverty.

We planned 3 things

1) Enough possible pension income to cover all of our basic needs plus a couple of UK holidays annually- we have reached that point.

2) Desired pension income level- this covers point 1 but adds running 2 cars and a long haul holiday annually

3) Luxury retirement- covers 1 &2 but adds several additional things like spending time travelling long haul possibly for up to 3 months annually, some costly hobbies and possible inheritance being left behind when our time comes.

If I reach point 2 in the next two or three years we'll retire and we'll be happy. If however I am still enjoying work I may continue until I'm 60 and try to reach point 3, with if she wishes Mrs CRV retiring whenever she wishes.

I should point out Mrs CRV is independent and does whatever she wants in terms of her timings/ savings. We have our finances arranged such that I look at the macro- how we will reach our target and she the micro- how much we need and how it will be spent! Not for everyone but it works for us. We each manage our surplus monies how we wish, neither is extravagant but trusts the other to do their best for us both as a couple.

The point of my having 3 different numbers in mind is by aiming for level 3 I am keeping my/ our plans on track and am well aware that health issues can intervene to alter planning.

The SPs when they start will push us into level 3 but we would rather plan to enjoy while we are younger. We joke with our nieces and my sons we are taking our gap years at the end of our working lives rather than at the beginning!

mgdavid

westv wrote: »

That's my thìnking too although I would need to decide where the SP filler part of the pot will go. Separated or not.

thought you said the question wasn't specifically about you but was just general?
In my case I had no gap as I was fully employed to 65 and with a mix of DB and DC pensions actually had a possible higher income upon retirement so I deferred SP.

lisyloo

SIPP for me as I can contribute via salary sacrifice which gives excellent tax breaks.

westv

michaels wrote: »

...deduct state pension times number of years to state pension age from DC pot to use as income until spa and then take the rest at a safe withdrawal rate of say 3.5%. Eg retire at 57, 10 years x 8.5k = 85k, subtract from pot of 585k leaves 500k x 3.5% = 15.5k so total income 24k.

westv wrote: »

That's my thìnking too although I would need to decide where the SP filler part of the pot will go. Separated or not.

mgdavid wrote: »

thought you said the question wasn't specifically about you but was just general?
In my case I had no gap as I was fully employed to 65 and with a mix of DB and DC pensions actually had a possible higher income upon retirement so I deferred SP.

Yes I did say that but obviously I can still add my thoughts on the matter.

Alexland

Our plan is simply that the first £90k (rounded up) of our DC pots each goes towards the 10 years of missing state pension and the rest will go into 1/35th drawdown.

Alex

justme111

crv1963 wrote: »

I could go but Mrs CRV would still need to work, for us not a situation we want, we want to go at the same time. I am trying to balance two aims- i) that Mrs CRV has a large enough pot to draw against up to the PA and

Why is it necessary for her to draw up to her PA if your Number is achieved with just your pensions? Or have I m8sunderstood you?
Do you realise that if health issues intervene you will not just have to alter planning but you may have to forget your long haul holidays altogether or even worse?