Just Retired - What to do First?

owlery

Hi,


I'm in my mid-fifties and will be retiring in the next few months at which time I will get a generous tax-free lump sum. It's a good position to be in but I have no idea what to do next. Do I find an independent financial advisor or is there anything I can do myself in the short-term? Having the money sat in the bank is obviously a bad idea but I don't want to run loads of different accounts, all accruing interest and causing me to have to deal with a very complex tax return. Opening an ISA is a given but £20k maximum per year doesn't help with the practical problem of spreading the money out in the short term and moving it around via my bank accounts which have transaction limits of £10k-£20k. Is the conventional wisdom at the time of writing to simply buy an annuity with virtually all of lump sum and consider myself "fully retired"? I do also have several (relatively small) pensions to cash in as well.


Thank you for any help you can offer.

ajbell

Hookers + cocaine.

worried_jim

ajbell wrote: »

Hookers + cocaine.

And repeat.

owlery

How do you think I got the money in the first place?

xylophone

Do you have to take the lump sum?

Thrugelmir

Annuity rates at an early age may not be particularly attractive.

owlery

I do have to take the lump sum.

xylophone

Have you checked your state pension position?

https://www.gov.uk/check-state-pension

You might hold the cash in NS&I while you consider your options.

https://www.nsandi.com/income-bonds

You could consult an Independent Financial Adviser to look over
your planning for the lump sum and the other pensions.

There may also be other considerations - IHT planning?

https://adviserbook.co.uk/

You would tick "confirmed independent" and such other spcialisms as are required.

enthusiasticsaver

owlery wrote: »

Hi,


I'm in my mid-fifties and will be retiring in the next few months at which time I will get a generous tax-free lump sum. It's a good position to be in but I have no idea what to do next. Do I find an independent financial advisor or is there anything I can do myself in the short-term? Plenty you can do in the short term (see below) but getting an IFA to advise might be a good idea anyway. Many do a free snapshot meeting to give you an idea as to whether you like them and if you think it is worth pursuing their adviceHaving the money sat in the bank is obviously a bad idea but I don't want to run loads of different accounts, all accruing interest and causing me to have to deal with a very complex tax return. I am not sure why you would need to run lots of different accounts or have a complex tax return. What is your attitude to investing? Opening an ISA is a given but £20k maximum per year doesn't help with the practical problem of spreading the money out in the short term and moving it around via my bank accounts which have transaction limits of £10k-£20k. Is the conventional wisdom at the time of writing to simply buy an annuity with virtually all of lump sum and consider myself "fully retired"? No, that is not the conventional wisdom. An annuity is one way to go but not necessarily the best. Depends on circumstances.I do also have several (relatively small) pensions to cash in as well.


Thank you for any help you can offer.

Having recently retired ourselves both DH and I have gone down the route you are about to travel. We retired at 58. Several things we did before actual retirement, in fact even before we actually put in the retirement request.


We collated all our pension data, got forecasts, retirement dates and information on reductions should we take them early but our pensions were a mix of defined benefit (final salary) and defined contribution. If you are talking about annuities I guess yours is a defined contribution scheme? If so, you might want to look at investing but I would suggest you get IFA advice if you are not experienced in that or educate yourself by reading about investments etc. Don't forget to get a state pension forecast too to make sure you have full contributions.


You also will need to know how much you need to live off if you have not already worked that out. That way you will know how much income your pension needs to provide.


How you achieve the necessary income depends on other savings or investments you have, your attitude to risk and investment and various other things like your health and personal circumstances like whether you have a mortgage or other debt.


There are all sorts of ways of providing income like drawdown on existing or new SIPPS, drawing down on DC pensions or stocks and shares ISAs, annuities, monthly income portfolios. Keeping it all in cash which is what you seem to be talking about will hardly keep up with inflation so I suggest you explore other options too.

jamesperrett

Is this a defined benefit pension? If so, you may be able to put some of the lump sum into another pension without falling foul of the recycling rules.

owlery

Thanks, I have several pensions including one Defined Benefit and thought it might be worth putting them all together to buy an annuity but I will also have to pay a lot of tax this and next year and wondered if I can do a SIPP instead and save a lot of tax that way. I only heard of the carry forward rule recently and that sounds like a good idea.



The annuity is what I thought would be the easiest way. Build up your wealth as much as possible and then buy the best annuity you can. No more having to manage your finance - just live off a single payment every month.