How much to live on

Dazza1902

Dairy Queen, I think Blue Peter was merely pointing out the ease of an annuity. Passing on a DC pot to the financially incapable or senile might be a problem. Some folk just want simplicity even if it leaves them out of pocket.

blue.peter

DairyQueen said:

Nobody (in their right mind) will buy an annuity right now. Why would anyone sign-uo to a guaranteed loss of capital?

I absolutely disagree. I bought an annuity with my DC fund (in 2016), and don't regret it at all. Yes, I might well lose out financially. On the other hand, I might benefit. It depends how long I live.

It's longevity insurance.

It gives me certainty of income for the rest of my life and hence peace of mind.

I value those.

runningromani

Hi @otb666 thanks for the reply, sorry if not clear...... we have inherited the house very recently, I would never include otherwise, my mum is still alive and I don’t factor that in, as you suggest care costs will negate most inheritance. Good advice @Dazza1902 thank you 😊 

Langtang

runningromani said:

Have checked state pensions, wife’s is full, mine is down £10 per week thereabouts so not worried about that, I’m about 2 years short as was in SERPS. 

More knowledgeable people may chip in, but there may be a cost-effective way for you to make up the lost £10 per week pension by "buying" 2 lost years. For a little short of £900 you could buy an extra years NI contributions, giving you a £5 increase per week.

It may not seem worth it for the £10 that is missing, but it could pay for itself in only a few years (this is MSE, after all)

runningromani

Thanks for the reply @Langtang I have to admit despite saying it didn’t bother me it is a little irritation. I will consider it, I have thought about some work over Christmas periods which could pay for this as will be taxable due to my pension etc exceeding allowance, food for thought. 
 

drummersdale

runningromani said:

Thanks for the reply @Langtang I have to admit despite saying it didn’t bother me it is a little irritation. I will consider it, I have thought about some work over Christmas periods which could pay for this as will be taxable due to my pension etc exceeding allowance, food for thought. 
 

I have been a Civil Servant for 40 years and am toying with the idea of taking partial retirement next year when I would be 59 so I take my hat off to you for considering going at 55! Hope it all goes well.

runningromani

Thanks @drummersdale it’s become a possibility due to the inheritance which is very sad but what mum in law wanted for us. I would have held on longer otherwise but I’m struggling with work and not happy and this gives me and my wife a way out a little earlier. Just need courage to do it now. Well done on 40 years, that was my original target and I take my hat off to you. We’ve seen a lot of change to be sure! 

drummersdale

Hi @runningromani Courage is a good word as when you have been used to working for so long the thought of not doing so is a bit daunting - although in my case I am looking to soften the blow by going partial for a few years.  In fairness when I see others who have taken the leap into either full or partial retirement they wax lyrical about it and say how marvellous it is so hopefully they are all telling the truth!

arnoldy

DairyQueen said:

Nobody (in their right mind) will buy an annuity right now. Why would anyone sign-uo to a guaranteed loss of capital?

@hugheskevi rightly illustrates that a DC pension/SIPP will 100% pass to the surviving partner.

You are missing a trick.

Totally agree, annuities can be very dangerous products and IMO will be one of the next miss-selling scandals. Most annuities are "fixed" and leave you utterly exposed to something you have no control over - INFLATION. Bizarre that people think that they are some form of longevity insurance. 

Ok you can buy an annuity with a bit of inflation protection, and half pay for the survivor - but you would be luck to get 2.5% and have to give up all your capital. In contrast FTSE All share is way over 3% at the moment natural yield.

MATH does not add up for annuities.

PennyForThem_2

arnoldy said:

DairyQueen said:

Nobody (in their right mind) will buy an annuity right now. Why would anyone sign-uo to a guaranteed loss of capital?

@hugheskevi rightly illustrates that a DC pension/SIPP will 100% pass to the surviving partner.

You are missing a trick.

Totally agree, annuities can be very dangerous products and IMO will be one of the next miss-selling scandals. Most annuities are "fixed" and leave you utterly exposed to something you have no control over - INFLATION. Bizarre that people think that they are some form of longevity insurance. 

Ok you can buy an annuity with a bit of inflation protection, and half pay for the survivor - but you would be luck to get 2.5% and have to give up all your capital. In contrast FTSE All share is way over 3% at the moment natural yield.

MATH does not add up for annuities.

My now deceased husband bought an annuity that gave me 50% when he died + 4% p.a. I think around 2007-8.  For me as survivor it has given me a rock of guaranteed income (which has out performed due to 4% increase annually - and yes I know markets SIPPs etc can do better than this) in the same way that my SP has.