Has Covid changed your approach?

downshifted

I am fortunate to have a pension pot that I do not need for comfortable day to day living because I have a defined benefit pension that is sufficient. It has been growing well, I’ve been content to leave it as a fall back in case I die before my husband (he has a lower pension income than me) and then to be passed on to our offspring. I will get my state pension this summer so definitely do not need more regular income.

However I’m now thinking of taking some out for a splurge when things improve. Covid makes you realise life is short, maybe you should take every opportunity for experiences and enjoyment. My husband is 70 this year, I’d like to treat us to some special celebrations, it seems more important because we’ve not been able to do anything for the past year. It would also be nice to do a number of trips to make up for lost time. I could use savings, but the pension pot has grown to a far bigger pot than would be necessary for my husband should I die first, (£500k +) 
I’m also wondering if the Chancellor might go for the tax free lump sum as a way of paying for all his recent largesse, so maybe it makes sense to take some now

Is anyone else finding their normally very cautious outlook adjusting? Maybe I’ve just always been in the habit of saving rather than spending and the pandemic has given me a shake

dunstonh

I’m also wondering if the Chancellor might go for the tax free lump sum as a way of paying for all his recent largesse, so maybe it makes sense to take some now

The tax free cash payment is one of the lowest costs to the treasury when it comes to pensions.  It also helps the economy.  It would be politically damaging and wouldn't make any sense to do it.   There are far easier targets that could raise more.

NedS

dunstonh said:

I’m also wondering if the Chancellor might go for the tax free lump sum as a way of paying for all his recent largesse, so maybe it makes sense to take some now

The tax free cash payment is one of the lowest costs to the treasury when it comes to pensions.  It also helps the economy.  It would be politically damaging and wouldn't make any sense to do it.   There are far easier targets that could raise more.

Agreed, so don't let that alone be your deciding factor.

If you have saved it, and can afford it, why not take some and have a splurg for your husband's 70th.  Be aware of any tax you will pay on large withdraws and try to stay under any tax thresholds where you are able. I think one of the hardest things in retirement must be switching from the lifetime habit of saving into spending mode and getting used to seeing your assets diminish.

michaels

Inheritance tax may make it more efficient to spend savings rather than pension?

cfw1994

The effect Covid had on me was to put off handing in my notice for 12 months!
My original plan was popped on hold when it became rapidly apparent that sitting at home was going to happen either way....

garmeg

cfw1994 said:

The effect Covid had on me was to put off handing in my notice for 12 months!
My original plan was popped on hold when it became rapidly apparent that sitting at home was going to happen either way....

Same here, was going to FIRE last summer!

Bravepants

I don't anticipate getting back into the office particularly early this year, and maybe not until NEXT year! I aim to retire in a couple of years' time, but I may ask to go part-time at the start of financial year 22/23 and work a year longer. This would mean that I would have more freedom to go and see my family, and do other things, after being hemmed in and tied to a desk at home for nearly a year now.

downshifted

NedS said:

dunstonh said:

I’m also wondering if the Chancellor might go for the tax free lump sum as a way of paying for all his recent largesse, so maybe it makes sense to take some now

The tax free cash payment is one of the lowest costs to the treasury when it comes to pensions.  It also helps the economy.  It would be politically damaging and wouldn't make any sense to do it.   There are far easier targets that could raise more.

Agreed, so don't let that alone be your deciding factor.

If you have saved it, and can afford it, why not take some and have a splurg for your husband's 70th.  Be aware of any tax you will pay on large withdraws and try to stay under any tax thresholds where you are able. I think one of the hardest things in retirement must be switching from the lifetime habit of saving into spending mode and getting used to seeing your assets diminish.

Thanks, you’re right i do find hard to change my long term habit, and savings do become a comfort blanket. However I have decided to go ahead and have a modest splurge; who knows what the future holds. In my head I’ve set a conservative level and in future when the pension pot goes over that level I’ll consider taking some out from profits. Thanks for your encouragement.

pensionpawn

55 soon and have not changed any plans, strategy or funds over the last 12 months. Pension has grown 9% and I'm happy with that. I wasn't planning on retiring for another 2.5 years and that hasn't changed either. Even though I enjoy what I teach the thought of going into work (remote teaching is exhausting and not as enjoyable) is not a pleasant one at the moment. That said there's no point in retiring early in the current climate. Steady as she goes through difficult waters. I also agree with the view here that it makes no sense for the government to tax the TFLS as they need to stimulate spending (hence the prospect of negative interest rates), and if they did try there would be rioting by the over 50's on the streets. Some of us have been banking on their TFLS for decades!

barnstar2077

I say if you have the money you should make some memories together while you still can, your husband will treasure those memories more if you should go first than a bit extra in the bank.

On an aside this thread made me think of a memory of an elderly couple I once knew.  My sister asked the husband who was in his eighties at the time if he wanted a cup of tea.  His face lit up as he said that sounded great, until his wife chimed in with "Not after seven dear."  His face dropped as he realised it was ten past seven.  Some times you just have to live a little!  :  )

Nebulous2

I'm in an LGPS scheme, with a decent (by my standards) amount of accrued pension, and a job I used to quite enjoy. I went away for a month in March last year and applied to go part-time from October before I went. 

I came back to a very different world, working from home instead of the office. While dealing with the pandemic I agreed with my manager to 'park' my request for part-time. We need to apply 6 months in advance. 

Since then my organisation has decided to limit phased retirement and part-time work, mainly because they can't recruit, and I've become disillusioned with some of their behaviour.  It feels like I've run out of road at work. 

I've applied for a  job as a vaccinator, with a significant drop in salary, on a fixed term contract until  end of March 2022.  That will mean handing in my notice, drawing my pension, and working 2-3 days a week instead of 5. Not the ending I expected, I never imagined going back to the health service, but one I am quite excited about. It also helps me gradually move into retirement, instead of the dramatic cliff edge.