How Are You Funding Gap from Retirement to State Pension?

swindiff

justme111 wrote: »

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?

Because it then comes out tax free

Triumph13

The earlier you retire the more complicated it gets - although I admit it's a nice problem to have! I retired at 52 so state pension is just one of the many different things I have to factor in at different ages. We start with cash, then maturing mortgage endowments, then we can start drawing from DC pensions and eventually some small DB pensions and SP. You just have to use a spreadsheet to juggle tax efficiency vs cashflow to make sure you have enough in each year to cover spending. Flows between pensions and ISAs are largely driven by tax considerations irrespective of when you plan to spend the money.

crv1963

justme111 wrote: »

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?

My DB gets us to level 1.

Mrs CRV current DC pot gives her 3.5k pa so by saving into a SIPP for her we can either combine the pots and draw 12k pa tax free or simply run the SIPP down at 8.5k pa plus the 3.5k ps from her existing pot from 57-67. All of which would be tax free for her, this plan would take us to level 2 , as suggested by swindiff.

This way it means if something happens to me Mrs CRV will be financially secure if not exactly rich as she would get a survivors pension. If anything happened to Mrs CRV I would get the same even income, as in 12k pa plus my pension, and when my SP starts the same plan of SP+3.5 k from DC pot would apply. But I am of course hoping this is a hypothetical point!

Having had a period of time off sick following a heart attack a couple of years ago I do appreciate illness can and does strike when you aren't expecting it. Hence my determination to do my best to secure a decent income for Mrs CRV, without driving myself into the ground, I changed from a very stressful role to what I consider a less stressful one, with incidentally increased pay, I enjoy working shifts, weekends and nights so although it isn't for all it works for me.

Currently it is our diabetic dog that throws a spanner in the works, but I do think we are going to have a solution to Mrs CRV fears about going away without her as a niece has decided to train as a veterinary nurse and has offered to stay at our home when we go away.

justme111

swindiff wrote: »

Because it then comes out tax free

I understand , what I meant was why did they want to keep working in order to earn the money which would then be taken tax free if they could retire now with enough money from his pensions.
Crv says that's because they want to have more money in retirement than just enough and because he likes his job basically - fair enough.

crv1963

justme111 wrote: »

I understand , what I meant was why did they want to keep working in order to earn the money which would then be taken tax free if they could retire now with enough money from his pensions.
Crv says that's because they want to have more money in retirement than just enough and because he likes his job basically - fair enough.

Basically I like my job, but specifically although we could manage on my pension alone, should I die Mrs CRV would probably find herself living a very tight lifestyle with little leeway. By boosting her pension savings we achieve both aims i) ensuring we reach a more comfortable retirement than just getting by and ii) I have peace of mind that should I curl up my toes Mrs CRV will be able to manage life at a reasonable standard of living.

I do appreciate that everyone has different expectations and aims for their retirement. I was just sharing our view/ plans.

Happier_Me

From 55-58:
We're planning on using ISA's (not saved for this yet),

From 58-60:
Husbands company DC plus a personal pension for me. Husband is on track with his pension savings, I have a gap in my pension saving here.

From 60-68 ish:
Husbands company DC plus small S32 pension
My DB scheme:£12k plus £20k lump sum ('in the bag', in today's money and still growing)

From 68 onwards:
My DB
Whatever is left of husbands DC pot and S32 pension
State pensions x 2

We have around £300 a month of passive income that will last until 62 also.

Hopefully we will have a lump sum saved and downsizing is a very realistic option for us also.

arnoldy

Why use the SIPP or DC scheme until my DB scheme kicks in?
What is the point in deferring the DB? You may never collect it! If you do the maths you may be better off with a (yes a reduced) DB pension and then leaving the SIPP/DC pension to grow at a rate the DB pension probably won’t.
People are very scared of taking a DB pension early at a reduced level for longer. In many cases this is irrational and you are better off doing that and letting the DC/SIPP pension grow.

AlanP_2

arnoldy wrote: »

Why use the SIPP or DC scheme until my DB scheme kicks in?
What is the point in deferring the DB? You may never collect it! If you do the maths you may be better off with a (yes a reduced) DB pension and then leaving the SIPP/DC pension to grow at a rate the DB pension probably won’t.
People are very scared of taking a DB pension early at a reduced level for longer. In many cases this is irrational and you are better off doing that and letting the DC/SIPP pension grow.

Possibly true but if you value safety as in not running out of money before life then maximising DB is rational.

Attitude to risk, partner's situation, health and a host of other things come in to play. If deferred DB plus using DC whilst deferring means you have won the game why keep trying to break the bank?

Alexland

Also some people might want to avoid the complexity of concurrently drawing income from multiple pensions in retirement especially as they get older so might prefer to drain the DC first and defer the DB scheme.

Still it's important to decide your plan in advance as it might affect the DC asset allocation you take in the approach to retirement. If you know all the money is being withdrawn quickly you might be more cautious similar to if you knew you were buying an annuity.

Bringing this back to the thread topic it might also be appropriate to be more cautious with the circa £90k to cover the missing SP.

Alex

Thrugelmir

arnoldy wrote: »

People are very scared of taking a DB pension early at a reduced level for longer. In many cases this is irrational and you are better off doing that and letting the DC/SIPP pension grow.

Why sacrifice a guaranteed increasing income for the vagaries of the stock market.