Best way to get from 55 to NPA?

captainusa

Hi all,

Just turned 36 and think I need to start properly planning for retirement and how early I can actually retire. I'm aware I'm in a fairly fortunate positions as I have a partial RAF pension built already and also am a decently paid public sector worker. My wife is also a public sector worker so I guess this question kind of applies to her.

As of now I have.....

- £6500/year RAF Pension Paid at 65 with a £12k lump sum

- £24,736/year paid at 68 in today's money assuming I work to 55 and never get promoted again. If I work past 55, pot continues to increase pay-out of £1136/year for every year worked.

-State pension paid at 68 (some of this is contracted out so might need to make some additional contributions to max it out at some point.)

Wife has.....

- £16,000/year paid at 68  in today's money assuming she only works till 55 and never gets promoted. Increases pay-out by £741/year for every year worked if continues to work post 55.

- Full state pension if she works till 55.

As you can see we are set for 68 onwards, however I would ideally like to retire early and 55 would be the goal, although 60 doesn't sound too terrible either. I imagine my wife would say 55 at the latest for her. It also doesn't really give us much flexibility as none of these pensions are cash pots which might be nice to have.

I'm brand new into thinking this through and prepared to do the reading, but would love some signposting on what might be the best solution. LISA? S&S ISA? AVC for civil service pension? SIPP? or a combination? Do I need to worry about the lifetime allowance in it's current form? Obviously there are a lot of things that could change in the next 20 years such as either of us leaving the public sector, sickness/illness or my wife leaving me for playing too much warzone for a grown adult, but would just like to assume the status quo.

Thanks for any help!

molerat

Don't plan on having access to any pension funds at 55, look at SPA - 10 as that is something that is in the wind.

Also do not bank on your SPA being 68, I would plan more on 70 with anything sooner being a bonus.

I very much doubt your current SP amount is less than £80 so unlikely you will need to make anything up if retiring at 55.

IAMIAM

You won't be getting any pension before the earliest of 58, so 60 is a nice figure! 
I am planning for 60, once I max out public sector with paying more to get more, I intend to use a LISA/Old Pension CETV transfer (currently 100k) to bridge between 60-65.

Albermarle

I'm brand new into thinking this through and prepared to do the reading, but would love some signposting on what might be the best solution. LISA? S&S ISA? AVC for civil service pension? SIPP? or a combination? Do I need to worry about the lifetime allowance in it's current form?

If you spent some time scrolling through the pages of threads on this forum , you will see this is a common topic . How to bridge the gap between early retirement and  DB and SP pensions starting to pay . You should see some good answers to help you.

In simple terms LISA and pension means the government add free money to your pot so as long as you do not need the money until later then this is usually the best route . Whether the pension is an AVC or a SIPP depends on if the AVC has any special benefit compared to a stand alone pension.

The S&S ISA has the advantage that it can be accessed earlier but there is no tax benefit with it .

https://www.moneysavingexpert.com/savings/lifetime-isas/#moneybox

AlanP_2

OP - are you sure your annual public sector pension values are as at age 55?

My Local Gov statement shows a projected age 65/66 figure i.e. normal scheme retirement age. If I wanted to go earlier I would have to reduce that estimate by the actuarial reduction factors applicable to the scheme.

You may have taken your scheme age figure and done that to arrive at your amounts but thought it worth checking as the reductions are around 4-5% a year so would make a significant difference if going 10 years early.

PS - Open LISAs for both of you if you can even if they only get used for a few quid in the end. Once past 40 you can't open one.

tacpot12

I don't think you need to worry about the Lifetime allowance, but it will be worth keeping an eye on your total pension provision. You wife looks like she will have no issue with this, and you should perhaps think about ways that you could increase the contributions to pensions in her name as well as your own to further avoid the Lifetime allowance issue.

Just be aware that between that age of 45 and 55 you will need to look careful at what the stock markets are doing. What you don't want to happen is have lots of savings in S&S ISA or SIPPs that are supposed to carry you from 55 to NRA suddenly losing 20% of their value as they did at he start of the Coronavirus outbreak. 

MaxZorin

The McCloud Judgement may impact on your Public Sector pension so you may want to look into that further https://www.civilservicepensionscheme.org.uk/members/mccloud-judgment/

Most Civil Service pensions can presently be claimed from 55 with actuarial reduction.  However, the minimum pension age is likely to increase in the coming years.  This does though depend on what scheme you’re in as some, such as Classic, have protected minimum pension ages.  Your scheme guide will contain further details.

I’m in a similar situation and have started focusing more on retirement saving.  Ideally I’d like to retire at 50.  Whilst this is feasible, I think sometime between 50 and 55 is more realistic.  To help achieve this I’m aiming to use a combination of ISA savings and Classic pension to cover the period from retirement to 60.  From 60 to SPA, I’ll be utilising tax efficient LISA contributions and my Classic pension.  SPA onwards will be Classic and Alpha pensions in addition to SP.

crv1963

OP- my suggestion is to do as Albermarle suggests regarding where to put any monies you plan on saving. I also suggest that you look carefully at your wifes pension/ old age provision. Don't build masses of money in your name, but balance the pots as far as possible to be tax effective. I was always going to be a taxpayer in retirement, whereas my wife would not be and so we're having to pile money into her pension to try to balance income out.

Also bear in mind there are no rules saying every pot has to last a full lifetime, so you could identify "pots" that can be run down too zero, at which point other pots start paying, so smoothing retirement income. We plan taking my wife SIPP from when she stops work at a rate equal to her SP, exhausting this pot as her SP starts.

Thrugelmir

At only 36 don't forget to enjoy life a little. 19 years isn't long to build a substantial pot. Presumably you still have a mortgage to clear as well. 

JoeCrystal

  The best way to get from 55 to your NPA is to stay alive and happy! 
A lot can change in twenty years, hell; a lot can change in a few months like losing a job (or going from highly salaried to the minimum hourly waged job)! Have you considered buying additional pensions or buying EPA as well? But I think you got an excellent foundation for your retirement planning.